Dec 07 2013

Why Health Care Costs Are So High

In a recent series of article by New York Times‘ reporter Elisabeth Rosenthal on the cost of health care in the US, they examined the cost of an ER visit and getting there by ambulance. The cost of three stitches for one young lady was $$2,229.11 and a 15 minute ambulance ride for another with head and facial injuries was  $1,772.42. Why does it cost so much? Part of the reason is privatization and lack of regulation.

Paying Till It Hurts: E.R. Visit

As Hospital Prices Soar, a Stitch Tops $500

In a medical system notorious for opaque finances and inflated bills, nothing is more convoluted than hospital pricing, economists say. Hospital charges represent about a third of the $2.7 trillion annual United States health care bill, the biggest single segment, according to government statistics, and are the largest driver of medical inflation, a new study in The Journal of the American Medical Association found. [..]

The main reason for high hospital costs in the United States, economists say, is fiscal, not medical: Hospitals are the most powerful players in a health care system that has little or no price regulation in the private market.

Rising costs of drugs, medical equipment and other services, and fees from layers of middlemen, play a significant role in escalating hospital bills, of course. But just as important is that mergers and consolidation have resulted in a couple of hospital chains – like Partners in Boston, or Banner in Phoenix – dominating many parts of the country, allowing them to command high prices from insurers and employers.

Think the E.R. Is Expensive? Look at How Much It Costs to Get There

Thirty years ago ambulance rides were generally provided free of charge, underwritten by taxpayers as a municipal service or provided by volunteers. Today, like the rest of the health care system in the United States, most ambulance services operate as businesses and contribute to America’s escalating medical bills. Often, they are a high-cost prequel to expensive emergency room visits.

Although ambulances are often requested by a bystander or summoned by 911 dispatchers, they are almost always billed to the patient involved. And the charges, as well as insurance coverage, range widely, from zero to tens of thousands of dollars. [..]

Part of the inconsistency in pricing stems from the fact that ambulance services are variously run by fire departments, hospitals, private companies and volunteer groups. Some services are included in insurance networks, others not. [..]

In a recent study, the federal Health and Human Services Department’s Office of the Inspector General noted that the Medicare ambulance services were “vulnerable to abuse and fraud,” in part because there were lax standards on when an ambulance was needed and how the trip should be billed. The number of transports paid for by Medicare increased 69 percent between 2002 and 2011, while the number of Medicare patients increased only 7 percent during that period. In the last year, two ambulance companies have pleaded guilty or settled claims for overbilling Medicare. [..]

If an emergency call comes to 911, dispatchers decide which ambulance to send, depending on proximity. Most ambulance companies bill according to the level of skill of the team on board, rather than the medical needs of the patients they collect. A team capable of administering Advanced Cardiac Life Support costs more than one with only basic first aid training.

Distance rarely counts for much, although a small mileage charge is added to the fee. Some companies even charge hundreds of dollars extra if a friend or relative rides along with an injured patients.

1 comment

  1. TMC

Comments have been disabled.