Medical pricing makes the head spin – well let’s unspin it just a bit . . . No question, political courage is lacking at all levels to deal with these issues.  

First, hospital billing has been out of sync for decades.  This began, when as pointed out, all overhead charges were rolled into the bill.  Thus the famous $10 aspirin and the like became lead flags waived by reform advocates.  However, the flaw is in not forcing hospitals to bill like contractors and other service providers do.  Bill for the cost of products, drugs, devices, disposables and the like, then bill for labor separately (just as a mechanic or plumber would do), then bill for general overhead and finally there should be an allowance for profit in the billing.  At present that amount is hidden as are the other real costs under the foolish billing system that exists and which private carriers have perpetuated.   As for physicians, the fees charged bear no basis to reality, in that almost all patients being treated by the vast majority of doctors are covered under one health plan or another which DICTATES TO THE MARKET what the pricing structure will be.  Thus in the end, for almost all the services provided by physicians and surgeons, the amount billed to the patient is not relevant, it the amount ALLOWED or CONTRACTED that matters.  And that is often always much less than the billed amount. 

* David Lazarus wrote about “the inscrutable way that healthcare providers and insurers put a dollar value on medical services.” According to Jim Lott, executive vice president of the Hospital Association of Southern California, “patients are wrong to think that the charge on their bill reflects the actual cost of treatment.” Lott explained the “cost-plus system” allows hospitals to include “both the cost of a service and a portion of general overhead, including treatment of uninsured people,” to calculate charges. Meanwhile, insurance companies and “state and federal authorities…negotiate lower rates, in return for delivering thousands of patients to a particular clinic or hospital.” Lott described the system as one “that both condones and perpetuates inflation, while all but eliminating transparency in the marketplace.” Insured patients are overcharged by providers, and insurers pay “significantly less than the billed amount because they know they’re being hit up for unrelated costs.” Lazarus concluded that “a massive infusion of political courage” is needed “to tackle genuine healthcare reform.”

link to full article in the LA Times by David Lazarus @ http://www.latimes.com/business/la-fi-lazarus7-2008sep07,1,1072727.column