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Comment by cptskippy | Hacker News Reader

Price transparency doesn't really help when you can't factor in all the potential costs and unknowns. It certainly is of no use when there's a life threatening emergency.

A birth might be a flat $4000 but what happens if the mother has high blood pressure and needs to be on a magnesium drip? Or the baby is in distress and there's an emergency caesarean? Are you going to call around for a better rate?

The problem with our medical system is insurance. Insurance companies are always playing games to avoid paying bills and they force medical providers to play games to get paid. Vast amounts of money are wasted in billing and claims departments trying to process or deny claims.

It's gotten to the point where an insurer can fine the insured for submitting a claim with a code that requires prior authorization after seeking care from a healthcare provider. I'm not sure how pricey transparency would help with that.

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This is a particularly naive understanding of markets.

To restate your argument: there are sometimes unpredictable health care events that arise for which one cannot negotiate, bargain, and price compare in advance. Therefore, price transparency doesn't work.

The problem is you wouldn't make this argument about any other sort of good (for example, an emergency or home car repair) because you know exactly how markets function in those cases.

The answer is: when there's price transparency, and consumers are incentivized to shop around and demand lower prices, prices come down. This benefits not only yourself, but also consumers who don't want to (or are unable to) perform this role themselves.

This is why you pay cheap prices at the grocery store even if you don't haggle, clip coupons, and so on. This is why "emergency" home and car repair (while it may cost more) does not cost an order of magnitude more than "non-emergency" home or car repair.

Some reasons why healthcare markets are not nearly as efficient as other well-functioning markets (like car insurance):

- Prices are extremely inelastic: You'll pay whatever you have to not die.

- Consumers have far less control over what they purchase: they are told to purchase things by doctors, who may have different incentives.

- Healthcare isn't a "commodity" that can be easily swapped out. Prescription drugs may be commodities, but doctors are not. People won't easily swap doctors, making the entire system less efficient.

- There is no "perfect information", in economics speak: people know very little about what the quality of care they are receiving.

- It's extremely expensive to bring healthcare "products" to market (e.g., new drugs, hospitals, etc.). Like building a nuclear plant, very high capital costs reduce the number of players that can enter.

I don't think emergency car repair and emergency healthcare are comparable. You can take the bus or walk. If you mess up you can junk your car or upgrade to a nicer one later in life.

I do think price transparency would help preventative care, but (even if you're thinking in the aggregate) it won't help people in an ambulance on the way to a hospital. Other comparable services, fire and police, are already socialized but have similar, horrible, stories from before they were paid for by the government.

> The problem is you wouldn't make this argument about any other sort of good

The problem with your argument is that healthcare is a service, not a good; and unlike a commodity, every human body is different. A box of Nabisco crackers is the same regardless of where shop. Even service based industries like automotive repair have limited variability with parts or process. The service provided by healthcare providers varies dramatically depending on the procedure desired and who is performing it. Simple procedures like wart removal can be performed a dozen different ways and each has a different cost.

Routine healthcare services have relatively fixed costs and insureds typically pay small deductibles for these services. Uninsured individuals can absolutely call around for quotes on exams and common procedures like wart removal.

Unplanned and Emergency healthcare services are an entirely different story and aren't comparable to any other service. The nearest I can come up with would be an emergency plumber and, like emergency healthcare services, you play through the nose for them. The primary difference is that a plumber can triage the situation by shutting off the water before discussing options and payment. Doctors don't have such luxuries.

Statistically predictable costs could be built into pricing. Basically have the hospital insure itself against low frequency medical events.

To the extent that certain complications can be managed, this creates good alignment of incentives. The hospital bears the cost of not managing the complications and thus has an incentive to manage the complications.

To the extent that certain complications can't be managed, I still find it an appealing way to distribute the low frequency costs (it builds the systemic cost of offering the procedure into the price).

Outcome based payment schemes are probably how it happens though.

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