Monday, July 8, 2013

Pure and Total Idiocy of American Health Care System Illustrated in Cost of Having a Baby

Somebody is Getting Rich – It’s Just Not You

There is probably no worse design ever in heath care than the concept of fee for service.  If health providers get paid by the services they provide, and get paid more by providing more services they will provide more services.  This simple fact of economics is lost on the people who designed Obama care.  It is lost on most health professionals who care about costs and it is lost on the American public, who if they understood basic economics would not allow a system like we have to exist.

A detailed report in the NYT lays out the horrible cost of having a baby, and the fact that in the United States we pay far more for delivery and get a lot less for our money.

Only in the United States is pregnancy generally billed item by item, a practice that has spiraled in the past decade, doctors say. No item is too small. Charges that 20 years ago were lumped together and covered under the general hospital fee are now broken out, leading to more bills and inflated costs. There are separate fees for the delivery room, the birthing tub and each night in a semiprivate hospital room, typically thousands of dollars. Even removing the placenta can be coded as a separate charge.

Each new test is a new source of revenue, from the hundreds of dollars billed for the simple blood typing required before each delivery to the $20 or so for the splash of gentian violet used as a disinfectant on the umbilical cord (Walgreens’ price per bottle: $2.59). Obstetricians, who used to do routine tests like ultrasounds in their office as part of their flat fee, now charge for the service or farm out such testing to radiologists, whose rates are far higher.

Add up the bills, and the total is startling. “We’ve created incentives that encourage more expensive care, rather than care that is good for the mother,” said Maureen Corry, the executive director of Childbirth Connection.

In the rest of the world the attitude is different.  They care enough about mothers and children to have a different system.

In almost all other developed countries, hospitals and doctors receive a flat fee for the care of an expectant mother, and while there are guidelines, women have a broad array of choices. “There are no bills, and a hospital doesn’t get paid for doing specific things,” said Charlotte Overgaard, an assistant professor of public health at Aalborg University in Denmark. “If a woman wants acupuncture, an epidural or birth in water, that’s what she’ll get.”

And as for Conservatives, who think the solution is giving patients control over their costs and services there is this anecdotal refutation.

The couple knew that price did not cover extras like amniocentesis, a test for genetic defects, or an epidural during labor. So when the obstetrician suggested an additional fetal heart scan to check for abnormalities, they were careful to ask about price and got an estimate of $265. Performed by a specialist from the Children’s Hospital of Philadelphia, it took 30 minutes and showed no problems — but generated a bill of $2,775.

“All of a sudden I have a bill that’s as much as I make in a month, and is more than 10 times what I’d been quoted,” Mr. Sullivan said. “I don’t know how I could have been a better consumer, I asked for a quote. Then I get this six-part bill.” After months of disputing the large discrepancy between the estimate and the bill, the hospital honored the estimate.

The solution is not difficult here, other countries know what to do and we have only to examine their best practices and emulate the best of them.  But that would require admitting someone else does it better than America, and it would require removing much of the free market, pay for procedure system and replacing it with a more rational one.  For modern America, that requires too much.

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