How Much is that New Hip in the Window?

Ever go on a first date where it was understood that you were the one who was picking up the tab and you got seated in the restaurant and the menu had no prices? Then your date ordered the shrimp cocktail, the Marjoram Roasted Rack of Lamb with Morel Panna Cotta, dessert, and champagne. Then the tab showed up and you blew your rent money on dinner. Then you took your date home and got a firm handshake and a "thanks, it's been fun, but I don't think we should see each other again."

Welcome to health care in the United States, where one is never to ask the price of, well, anything. It’s just not done. And for quite a few decades that was okay with most patients because “I have insurance and they’ll just pay for it.” Except that now, as the “Affordable” Care Act has settled in and made itself at home, insurance pays for less and less and you pay for more and more. More premiums, higher deductibles, higher copayments.

Maybe it’s finally time to start focusing on the real problem with health care in the United States, the cost of medical and pharmaceutical services. For too long our attention has been deflected and re-focused on the big bad insurance companies. But after all, insurance just pays the bills. The health care and pharmaceutical companies set the rates.

One of my clients had hip replacement in April. Everything went fine, no complications, good recovery. He did all of his homework, double checked the terms of his insurance plan, and prepared to pay his share of the tab. The procedure was a success however the patient lost his savings.  The “retail” tab so far is about $160,000 and the bills are still coming in. Of course, the insurance company has applied its many “pre-contracted price adjustments” and the actual tab is now at only about $40,000.

My client, being a responsible and credit conscious person, paid the bills as they came in, not waiting for his insurance to pay its share. So far, he is out of pocket more than $9,000 even though his insurance plan limits his out of pocket to $6,000. It’s now his task to recover the overpayments from the hospital and doctors who treated him. There are about six of them, some who he has seen, some who he never heard of…we call the unseen ones the “…ologists”. They’re the pathologists, radiologists, and anesthesiologists, all of whom seem to have really great billing services.

So, let’s go back two paragraphs. The tab for hip replacement, after “adjustments” was about $40,000. In fact, throughout the United States the average cost of a hip replacement is about $40,300. How does that compare to the rest of the world? Below is a sampling of costs of hip replacement in other parts of the world.

So why is hip replacement surgery in the United States anywhere from 10% to 700% more costly than in other countries? Well, part, but not all of the reason is that we have lived in a system where it is taboo to ask prices and it never really mattered much anyway because insurance picked up most of the bill.

It doesn’t end with medical procedure and facility costs. Pharmaceuticals, in general, are much more expensive in the United States. Here are two examples:

How can you begin to reverse this situation? Well, the next time that you need medical care (not an emergency, of course) think of the menu in the restaurant that doesn’t display any prices. Outrageous, right? Well, it’s just as outrageous for the health care system to make pricing questions so difficult to answer. Another restaurant analogy…now imagine that you’re ordering from the “no prices” menu and you ask your waiter the price of the meatloaf. The waiter says, “Well, do you mean the retail price that you would pay today, the credit card price that you pay over time, or the pre-paid dining plan price? And, by the way, which restaurant network does your pre-paid dining plan use? We may not be in network. And you know, just because our restaurant may be in your network doesn’t mean that the chef or the busboy is in your network. So, I’m afraid that I can’t give you a firm price today, you’ll just need to eat your dinner and take your chances.”

It’s time to become just as outraged with health care and pharmaceuticals as it would to be outraged at the “no prices” restaurant. Stick up for yourself or your family member. Insist on firm pricing information and, most important, research prices for care. Until we all begin to behave like consumers the health care system is going to get away with highway robbery. Thanks for reading.

Alan Leafman, President