Assuming that was under the deductible, so the ambulance provider did not get paid anything else, and $500 was the negotiated pricing for members of your insurance plan.
Hm? The insurer would've paid the difference (minus some additional discounts depending on the size of the insurer and its bargaining power). That the patient paid $500 does not in the slightest bit indicate that the insurer negotiated the rate down to that pricepoint.
Even at $500 (and let's assume that was an hour-long ride, for easy math that's maximally generous to your argument), EMTs on average make around $20/hour at best, and maybe double that for a nurse - so a fully staffed ambulance would run around $80/hour for labor. Round it up to $100 to be generous and that still leaves $400 for the ambulance itself. Ambulance itself costs up to $150,000, so earmarking another $100 would pay it off after 1,500 hours of service - so less than a year, even if it's only running for 40 hours a week. Maybe it's really fuel-inefficient and breaks down frequently, so we'll say another $100 for fuel and maintenance. Throw in another $100 to pay off $150,000 worth of equipment and medical supplies.
So of that $500 price the patient pays, we're left with $100. At the price billed to the insurer, that's an eye-watering $11,600 of what appears to be pure profit. Maybe there's some excuse for that, but to me it's pretty obvious that something's way out of whack. $500 or even a bit more than that would be reasonable if EMTs and nurses were being paid better, but they largely ain't.
I have no idea how much ambulances and personnel cost, but I do know that whatever the costs are, they have to be distributed amongst the emergency events.
An ambulance and redundant staffing is paid to be available 24/7, but there might only be 3 or 4 or 10 trips per day.
I assume there are also considerable liabilities and hence insurance costs.
That doesn't make the fact that they bill such a ridiculous amount in the first place any less unacceptable.
And if you're uninsured? Or your insurance refuses to cover it? Or it does, but with a high deductible?
My point is that the "well established practice" in question is useless at best and outright detrimental (to say the least) on society. Why even bother throwing out that number unless there's an expectation that someone would pay it?
I would have made the same statement if the government had paid the ambulance company $500, or if the government’s cost for providing that instance of ambulance service was $500.
Those workers are paid ~minimum wage, and the amortized cost of the vehicle and its equipment is not $500/ride.
The reason they charge $500, $800, or $12,000 is because ambulance firms have monopoly licenses, because you're not going to haggle over the price when one arrives, and because they can charge you whatever the hell they want, and when the dust settles, some people might even pay it.
Source: https://www.census.gov/library/publications/2021/demo/p60-27...
Again, I cannot stress enough how insane this sounds to someone from most other first-world countries.
Obviously, the $12k is ludicrous, proven by them being willing to accept $500 for people who belong to an insurance plan.
Health insurance in the US is not just insurance against a one time high cost event. One aspect of it is paying a business to gain access to lower pricing due to volume that you would be unable to get as an individual, which seemingly this person’s insurance plan did.
It only makes sense to talk about volume discounts when there is actual savings from providing volume (for example, less packaging). Many different instances of individual care do not create such savings, for anything but handling the make-work billing paperwork that this system itself generates.
This idea that individuals shouldn't be market participants is a broken assertion that underlies much of our healthcare dysfunction. In the situation you're describing, the "insurance" company has zero market leverage over the ambulance provider, and so you're championing a specious "negotiation". Meanwhile individuals that need a ride to the hospital avoid calling 911 since they have no idea what it will cost, and instead look to markets with price transparency to fill in (ie markets where they're welcome).
A straightforward healthcare reform would be to eliminate this cartel dynamic of providers having a different price for each "insurance" company, and mandate that they charge the same published prices regardless of who is paying. At that point, insurance companies would financially provide real insurance rather than their current function of bundling and obfuscating price signals. There would no longer be this "out of network" nonsense, but rather insurance coverage would be based on percentages of market prices. Insurance companies could then recommend providers that charge lower prices to save money for themselves and their customers, while still allowing their customers to be market participants when their preferences differ.
I do not assert this. I would much prefer transparent pricing and people being able to shop around.
> In the situation you're describing, the "insurance" company has zero market leverage over the ambulance provider, and so you're championing a specious "negotiation".
If this was true, then the ambulance company would not have accepted $500, and would instead demand the $12k they billed. It may be that the leverage is simply political or PR, but it must exist in order for them to come down from their fantasy list price.
I agree with your last paragraph, and that is the situation as of recent due to new laws passed about surprise billing and out of network restrictions for emergencies. As well as publicly listed prices.
Or are you at some point willing to admit that not everything should be a private, purely for profit/shareholder value, venture?
The fact that the insurance company can negotiate the bill to $500 indicates what the real price is. The $12k number is just fantasy numbers that healthcare providers throw out to start the negotiation.
That really depends on your definition of "real price", particularly considering how in a lot of developed countries that'd still be considered a pretty outrageous price to pay for such a situation, particularly while even having insurance.
It does not depend on who pays for it.
I did not intend to comment on who should or should not be liable for paying this price, simply that $500 seems like a reasonable price for an ambulance service.