Imagine you went to the local market for food for your family. But this market has no prices on the food and you have no history of knowing or understanding such prices as they have never been posted.

You get to the checkout and are presented with a bill for $1000.00 the basket of goods – a basket that today you might pay $200.00 for in a competitive shopping environment.  The bill has a total amount with no breakdown. So you don’t know if the soup is more than the bread and by how much.

Imagine there are other people in line with you who bought the exact same basket. One is charged $2000.00, one $600.00 and one $1400.00. As others pass through the line with the same basket that day, each is billed differently.

When you learn about this issue, you call the manager and ask why. You are first asked why do you ask, since your food insurance is covering it? But you press on and are told that each food insurance company has cut a different deal with the market. And that the shopper charged $2000.00 has the misfortune of having no food insurance at all, so she will have to pay the entire amount out of her own pocket.

And by the way, you don’t get to choose your food. You went to the market hungry and they decided which food was best for you. But different “doctors” decided differently for the same level and quality of hunger, some influenced by the food literature and others selecting foods that they had been marketed by food sales professionals who visited their offices and sponsored expensive advertisements and “studies.” And the doctors are paid by the amount of food prescribed, so they are incented to overfeed you. The conservative doctor who gives you only the food you truly need, is paid less than his colleagues who overfeed.

In essence, this describes in part the irrational and unsustainable state of health care economics and payments as described in this New York Times article.

What kind of system can or should survive such irrationality. It would seem that true price transparency, where patients can understand and by mindful of price, and have some incentive to do so, or price controls by a central authority (the Government?) are two options that would have a chance of improving this irrational status quo. Whether patients are capable or willing to shop for care wisely and make good choices combining quality and price is a questionable proposition given the complexities of health care. Whether doctors and hospitals are capable or willing to consistently provide rational treatment based upon best practices and cost is certainly not in evidence. And whether payers and society are willing to voluntarily change a system to one with transparency and cost consistently is certainly questionable based upon current practices. Read more…