There is a big push toward having patients be smarter consumers of health care as a way to control costs. Employers are pushing for medical savings accounts (where the patient has a pot of money they spend on health care or just save) and more and more insurance products have high deductibles and more cost sharing by the patient. The simple way of explaining it is that if someone else is paying the bill (insurance, medicare, the government) people will just use lots of care and testing and medications and procedures and have no regard to cost.
In a normal market, lower cost, high quality products would prevail. The medical market should operate that way but it doesn't because the incentives aren't aligned. The person receiving the benefit ( the patient) is often far removed from the true cost.
The only way a true market could work is if the consumer (patient) KNOWS WHAT SOMETHING COSTS! Here is the rub. It is near impossible for a patient to find out ahead what the cost of a test or operation or even a doctors visit will be. The system is so complicated, answering that easy question is not so easy.
Hospitals don't have one pricing method. They have contracts with each insurance company (there are hundreds) and each is written in a different way with different discounts for each service. A colonoscopy can cost $800.00 at one place and $6500 someplace else. Can you believe that range? The price is often not what the provider gets paid anyway. That price may or may not include the medications given or the gastroenterologist portion of the bill. In a hospital setting the price may differ if you are covered by one of hundreds of insurance plans or by Medicare. There are laws that say a provider can't charge less than it's lowest price contract and they don't want to charge less than what they could be paid by the highest price contract. There are also trade secrets so they aren't disadvantaged the next time they contract with an insurer. Are you dizzy yet?
There is no other industry where the consumer receives a service and doesn't know the cost. But there is no other industry that is so over regulated with such complicated payment methods either. There is no other industry where a product (service) is given and the government payment doesn't cover the cost of that product.
(How long would Blackwater contract with the government if they didn't get paid their cost? Why are other industries so eager to tap into the taxpayer's bank? Ah, but that is another blog)
Our industry- American Health Care- needs to get a grip and solve this problem. It isn't easy and I'm not blaming hospitals or doctors. Heck I am part of the problem too. Doctors also have to inflate their charges to cover the government payments that don't cover the cost of care. But it is insane to expect patients to be frugal purchasers of health care when they aren't told what something will cost.