Category: Health Care Costs

On the Anti-Cash Bias in Health Care

The patient needed a standard set of blood tests at LabCorp. The busy receptionist obligingly spent time querying her software to figure out the cash price for the tests. She came up with a quote of $537.00. Given the quote, the patient decided to go with his insurer’s network price.

Wise move.

As the statement of benefits shows, the network price was $68.63, a $468.37 saving over the cash price of $537.00.

This experience provides food for thought in several dimensions:

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Apr 10, 2013 | 13 comments | by

Too Many Emergency Room Visits?

Here is the argument for keeping things just as they are:

Researchers reviewed the records from almost 35,000 patient visits to emergency departments across the country. In 6 percent of cases, the patient was discharged and could have been treated in a doctor’s office.

The researchers then combed through the initial symptoms or complaints of these non-urgent cases and discovered that in nearly 90 percent of the other, more urgent cases, patients came to the emergency room with the same primary presenting symptoms, complaints like abdominal discomfort, chest pain or fever. In addition, more than 10 percent of these urgent patients ended up requiring hospital admission, surgery or intensive care.

I’m skeptical. It looks to me like only 10% of the patients really needed hospital care.

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Apr 05, 2013 | 12 comments | by

Why Cancer Care Costs So Much

Oncologists typically make more money if they use newly approved drugs and the latest radiation treatments than if they use cheaper, older alternatives that work just as well. (This is because they get paid back the cost of the drug, in addition to an extra 6 percent of that cost — the more expensive the drug, the higher the compensation.)

Some of these new therapies are rightly heralded as substantial advances, but others provide only marginal benefit. Of the 13 anticancer drugs the Food and Drug Administration approved in 2012, only one may extend life by more than a median of six months. Two extended life for only four to six weeks. All cost more than $5,900 per month of treatment.

Source: The New York Times.

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Apr 04, 2013 | 11 comments | by

Will the Federal Government Bankrupt the States?

State budgets are still under stress because revenues are not growing fast enough to replace the funding from the federal stimulus program. And now states are being pressured to expand Medicaid.

According to the National Association of State Budget Officers, Medicaid will account for 23.9 percent of total state expenditures in fiscal 2012. In most states, able-bodied working age adults are not eligible for Medicaid. One of the pillars of ObamaCare was the provision requiring states to either expand Medicaid to everyone with incomes up to 133 percent of the federal poverty level (plus a five percent income set-aside) or lose all of their federal matching funds. This provision was struck down by the Supreme Court.

But state governments are still being pressured to expand Medicaid, even though estimates suggest that more than 25 percent of people in the expansion group have private health coverage and that a sizeable fraction of them are college students. The federal government promises to pay 100 percent of Medicaid medical costs for the first three years of the expansion, and 90 percent of them in 2020 and thereafter. A variety of interest groups think that it would be a shame to leave this “free” money on the table.

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Mar 29, 2013 | 11 comments | by

Pay for Delay

The big pharmaceutical with a blockbuster drug gets to have the only product on the market for a little longer. It also doesn’t have to deal with price competition. The FDA estimates generics usually cost 80 to 85 percent less than brand-name drugs — not great news for the maker of the brand-name medication.

As for the generic drug maker, it has to hold off on coming into a given market — but it also gets a settlement from a pharmaceutical, often in the millions. Not a shabby deal either.

The Federal Trade Commission, which brought the suit, has a completely different take. It argues that this is horrible for consumers, who end up with higher drug prices as generics stay off the market longer than they otherwise would. With more than a dozen pay-for-delay deals struck annually, the FTC estimates that these settlements will cost consumers $35 billion.

More from Sarah Kliff.

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Mar 29, 2013 | 14 comments | by

Does the United States Have the Highest Medical Prices in the World?

It depends on where you buy your care. The International Federation of Health Plans — an international trade association for the health insurance industry — conducted a survey of health care prices across 25 countries and concluded: U.S. medical prices are the highest in the developed world.

For example, the total cost of a knee replacement in the United States 25th percentile price was about $16,500, while the average was nearly $26,000. By contrast, the comparable price in Switzerland was just under $12,000. Prices in New Zealand and Australia were about $15,000 and $22,000 respectively.

In the United States, however, patients can take advantage of MediBid, which facilitates competitive bidding among providers. (See our previous posts here and here). The average price for a knee replacement through MediBid last year was about $12,000 — similar to the cost in Switzerland and less than prices in South Africa, New Zealand and Australia.

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Mar 28, 2013 | 13 comments | by

Uwe Reinhardt Does Something I Like

He describes it here:

Five months after the commission [Chi aired by Reinhart] filed its final report, Governor Corzine introduced and New Jersey’s State Assembly passed Assembly Bill No. 2609. It limits the maximum allowable price that can be charged to uninsured New Jersey residents with incomes up to 500 percent of the federal poverty level to what Medicare pays plus 15 percent, terms the governor’s office had negotiated with New Jersey’s hospital industry.

I don’t favor government price fixing. But if an uninsured patient enters a hospital, somebody has to figure out what fee should be paid. The hospital’s list prices are phony prices that other customers are not paying and that were basically selected in order to maximize against third-party payment formulas, given the wacko way that Medicare pays. When the hospital tries to charge the uninsured patient list prices it is implicitly pretending that these are market prices, when they are not. So if I were on a jury having to decide who owes what, the New Jersey solution is about what I would decide.

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Mar 15, 2013 | 16 comments | by

Patients: We Are Not Interested in Controlling Costs

The study investigated the attitudes of 211 focus group participants in Washington, D.C., and Santa Monica, Calif., toward weighing their own out-of-pocket costs as well as the costs borne by their insurer in medical decisions. The participants, researchers said, did not generally understand how insurance works and felt little personal responsibility for helping to solve the problem of rising health care costs. They were unlikely to accept a less expensive treatment option, even if it was nearly as effective as a more expensive choice.

View entire study on consumers’ engagement in medical decisions at KHN.

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Mar 12, 2013 | 13 comments | by

Research Results I Wish I Hadn’t Seen

  • Female mortality rates increased in 42.8 percent of counties in the United States during 1992–2006.
  • The average physician will lose $43,743 over five years after adopting electronic health records.
  • Cost savings from workplace wellness incentives reflect cost shifting to unhealthy workers.

More on these issues in the Health Affairs blog.

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Mar 07, 2013 | 9 comments | by

RomneyCare, Part II

The legislative process would also seem to reinforce a technocratic belief, as the 349-page law passed 14 hours after the final language was released, and most lawmakers had little idea what they were voting on. A full summary was never compiled before the vote, and no cost estimate was ever conducted. As a result, supporters are able to claim the bill will save $200 billion without providing any justification for such a claim.

Josh Archambaul at Health Affairs.

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Mar 01, 2013 | 7 comments | by
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