Counterparties: Putting a price on illness
Welcome to the Counterparties email. The sign-up page is here, it‚Äôs just a matter of checking a box if you‚Äôre already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.
The US government is giving a whole new meaning to the term ‚Äúprice discovery‚ÄĚ. Today, the federal Centers for Medicaid and Medicaid Services released a trove of seemingly basic data to the public for the first time: the prices American hospitals charge Medicare for the 100 most common inpatient procedures.
The data, released early by the Obama administration to the NYT, Washington Post and the Huffington Post, have long been guarded by hospitals, who have treated the prices they charge as something like a trade secret. The release was spurred on, in part, by Steve Brill‚Äôs massive March Time cover story on how high hospital prices hit Americans. An uninsured patient might pay $199.50 for a blood test for which Medicare would pay $13.90, for example. Chris Kirkham and Jeffrey Young have the clearest take on the new data, and how widely these prices diverge:
Within the nation‚Äôs largest metropolitan area, the New York City area, a joint replacement runs anywhere between $15,000 and $155,000. At two hospitals in the Los Angeles area, the cost of the same treatment for pneumonia varies by $100,000, according to the database.
Even though insured Americans pay only a portion of these full charges, these numbers aren‚Äôt theoretical. Americans without insurance are often forced to pay the full bill. Brill, in a post today, suggest that situation is even worse than that: inflated hospital ‚Äúchargemaster‚ÄĚ prices can work as a kind of baseline for patient costs.
Los Angeles, Wonkblog notes, tends to have the biggest disparity in prices, but geography has little do with what hospitals charge. What does seem to affect hospital pricing is the type of hospital: for-profit hospitals, for instance, bill Medicare 29% more than government-operated facilities. (Hospitals, however, are reimbursed by Medicare at roughly the same amount, regardless of type or how much they bill the government). To Kevin Drum, the lesson from this is clear: the private sector isn‚Äôt acting more efficiently in delivering hospital care. It‚Äôs just charging more.
This data might make the American healthcare market a bit more transparent, but it‚Äôs still far from rational. In March, Ezra Klein noted that there‚Äôs no semblance of coherence among the prices insurers themselves pay for common procedures, devices and pills; each insurer negotiates their own pricing deals for these things with healthcare providers. Sadly, the only constant is that Americans pay far more than other countries for the same basic, relatively routine medical care — with worse outcomes. — Ryan McCarthy
On to today‚Äôs links:
America’s colleges are doing a terrible job recruiting low-income students – New America Foundation
America’s education system is leaving no rich child behind – WaPo
US companies’ record overseas earnings are up 70% in 5 years – Reuters
And, of course, there are many more links at Counterparties.