Extreme Discrepancy in Health Care Costs

After reading this article by the AP, it’s no wonder that people are so irritated with America’s health care system.  In “Appendix removal: Huge sticker shock in study,” the AP’s Lindsey Tanner says that a recent study done in California found a crazy discrepancy between the cost of an appendix removal at different hospitals.  While some people paid around $1,500 to get their appendix removed, others actually paid $180,000.  Since you don’t have much of a choice in the treatment given to you when you come into the hospital ill, it really is disheartening to see that there are times when you can’t trust that you are being fairly charged.

Even though this study was performed in California, it is said to be an accurate representation of what is happening all over America.  When you are comparing the health insurance quotes from different companies, a basic surgery like the removal of an appendix is usually covered.  But with most health insurance plans, you have to pay something towards the cost of your hospital bills.  My plan requires me to pay 10% of hospital bills after I have met my yearly deductible.  A bill of $1,500 versus one of $180,000 for getting my appendix removed is the difference between my out of pocket costs being $150 or $18,000.  That is hard to even wrap my head around.

The cost differences were based on the length of the hospital stay, the type of procedure used, how many scans were done, and where the patient was treated geographically.  While it was easy to account for 2/3 of the discrepancies, 1/3 of them were not clear through the research.  The governments of other developed countries have stricter regulation on the charges that can be given for health care to keep it uniform.  Based on the health care costs in America, it is questionable whether traditional supply and demand laws really work as related to health care.  While I’m sure there were many legitimate reasons for a wide range in the cost of an appendix removal, it seems that some type of reform is necessary to ensure costs are fair and only necessary testing and work is done.

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