Arnold Kling  

$125 K of premium medicine

Economics in Candyland... Energy Fallacy...

Wall Street Journal technology reporter Lee Gomes describes his treatment for pneumonia.

Abbott's Harold C. Flynn says it takes the Cell-Dyn 34 seconds to do an analysis. During that time, it counts an average of 325,000 cells, and then goes back and does more tests on 80,000 of them. (To think that once cells were counted by hand, by a lab tech looking through a microscope!)

As for the cost of all this, well, take a deep breath. This is where the conundrum of medical technology becomes apparent. The bill for my 10-day stay was $125,000 -- and that doesn't include any charges from my doctors. Those CT scans were $3,000 each, 10 times the cost of an X-ray. Each white blood-cell tally was a relative bargain at $250.

...Of course, I doubt that I would have declined any of the high-tech wonders I was offered. Who would? And that attitude is a main cause of our soaring health care costs. The decisions that are in our best interest as individual patients, in the aggregate, help push things into crisis. We can't afford the remarkable system we've been smart enough to build.

But you can be cured of pneumonia for a lot less than $125,000. If you had to pay with your own money, would you really opt for all those expensive procedures? Some people might, but many might allow doctors to treat based more on guesswork and experience than fancy scanning and monitoring.

In any event, if you were paying for premium medicine out of pocket, that would not be a social crisis. It would be an individual choice.

Comments and Sharing

COMMENTS (4 to date)
Don Lloyd writes:


Those are not likely to be true prices that anyone pays, but represent reference prices that allow insurance companies to negotiate 60-90% (?) discounts while sill allowing the providers to exist. As long as insurance, whether private or government, dominates the market for providers, they must dance to the insurers' tune and effectively write off any uninsured business by pricing well into an unaffordable region for the uninsured.

Regards, Don

Acad Ronin writes:

I take Don's point. I have often marveled at the discrepancy between what the doctors/hospotals say they are charging me, and what the insurers are paying. That said, medical tourism anyone?

Michael Sullivan writes:

I agree with Don Lloyd's comment. The other issue I have is that the $125,000 bill (or $50k bill if we assume current pricing is radically bloated by the current regime) looks very different to different consumers.

It's easy to imagine someone with $5 million in the bank making a rational decision about whether to invest $50k on these various tests, or just pay the $4-500 for a doctor visit, Xray and 2 or 3 standard prescriptions (like I've gotten the two times I had pneumonia), and only worry about the fancy tests if that doesn't solve my problem. But now, let's consider your typical middle class consumer. For somebody pretty well off and middle aged, that 50k might mean working another 5-10 years before retirement. That's a big deal. For somebody more average, it could be the difference between secure and on-track and being a bit of bad luck away from bankruptcy. For a pretty sizable minority, it's money that can't even be raised.

For this particular ailment, where the chances are 95%+ that the $500 treatment will work just fine and only about 1-2% that the full boat treatment will make a difference, this tradeoff doesn't look so ridiculous, but when the difference is a $500 treatment that's 50% to save your life, and a $50k treatment that is 80%, accepting near financial ruin looks pretty reasonable, and being unable to raise the $50k looks like a major human tragedy.

Which is why insurance that is not job dependent is so important. If most people can be reduced to "poor" pretty easily by hitting the medical anti-lottery and then losing your job, it's hard for anyone who is not actually wealthy to feel much financial security.

Dr. T writes:

Three comments from a clinical laboratory director:

1. The actual cost of the Cell-Dyn flow cytometry analysis is much less than $250.

2. The test probably provided no clinically useful information unless the patient was immunosuppressed. Even then, only one test would have been needed.

3. Ignore my grousing above: laboratory tests are the best bargain in healthcare.

Comments for this entry have been closed
Return to top