Cost of Healthcare

Economist Ewe Reinhardt blogging at the NY Times: U.S. Health Care Prices Are the Elephant in the Room

It’s a very interesting read. These two paragraphs jump out to me, but others may interest you more.

As Consumer Reports noted in an illuminating article, “Health care prices are all over the map, even within your plan’s network.” The chart at the bottom of the article, based on the Healthcare Blue Book on prices, is especially revealing.

The high variance of health care prices in the United States can be explained in good part by the opacity of these prices. Both government and the private sector have done their best to maintain that opacity.

Part of the problem it seems to me is that different facilities that can run the same test have different expense structures. Compare the cost of an MRI or CT scan at a hospital vs. a separate facility that can run these tests. In my experience the hospital is substantially more expensive. Most likely because they have higher day to day operating expenses plus issues with caring for the uninsured. The other facilities have the luxury of making sure you can pay before running the tests. They don’t have the accounts receivable problem that a hospital does.


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