I believe in free markets, but to have a free market you have to have transparency in pricing and information about the product. Which brings us to the health industry, which has neither. Can you believe a market where the seller doesn’t tell you how much the product will cost or even what you are buying until after you have purchased it? Even when you receive the bill, it is often indecipherable. And then, if you can’t pay, they can bankrupt you (or worse).
How bad is it? According to a nation-wide study, hospitals (especially for-profit hospitals) charge far more than it costs them to provide care. One hospital in Florida routinely charged patients 12.6 times the actual cost of patient care (that’s compared to what Medicare says it should cost).
That hospital is not an outlier. The study found fifty hospitals that charged more than 10 times their cost. All but one of those fifty was a for-profit hospital. Twenty five of the price-gouging hospitals are operated by Community Health Systems. Another fourteen are operated by the Hospital Corporation of America.
Forty percent of the worst hospitals operate in Florida, presumably where they can take advantage of seniors.
How do they get away with it? According to a co-author of the study (a professor at Johns Hopkins Bloomberg School of Public Health):
They are price-gouging because they can. They are marking up the prices because no one is telling them they can’t. These are the hospitals that have the highest markup of all 5,000 hospitals in the United States. This means when it costs the hospital $100, they are going to charge you, on average, $1,000.
It is time for conservatives to stop claiming that the government should stay out of health care and let the free market take care of it. We tried that, and it doesn’t work. Even Obamacare doesn’t regulate how much hospitals can overcharge. Currently, only two states (Maryland and West Virginia) have laws that regulate hospital rates. It is time to do this on a national level.