Hospital prices meaningless, is that news?

In today’s Albuquerque Journal, Winthrop Quigley writes (with a local angle) about a recent report in the Washington Post which “uncovers” the “shocking” information that hospital prices have no basis in reality.

I suppose that having the actual pricing data is somewhat interesting, but having welcomed two babies into the world in the last five years, the lack of correlation between hospital prices and reality was well-known and expected even prior to walking into the hospital for the first birth. After all, hospitals don’t operate in anything even remotely resembling a competitive free market.

With third-party payers (be they insurance companies or the government, not to mention charity care), hospital pricing has almost no bearing on reality.

A few good quotes from Quigley’s piece, “The charges vary a great deal among hospitals, but what they are actually paid is either set by Medicare or negotiated with insurance companies, said Stephen Forney, Lovelace Health System chief financial officer. Medicare payments vary by where a hospital is located, and hospitals like UNMH get higher payments because that’s how the federal government helps fund graduate medical education.

“Payments don’t vary a lot, just the charges.”

Transparency in hospital pricing is a nice idea, but ObamaCare is only further removing patients from having to pay the costs of their care, so I don’t see this data as being very relevant to the health care discussion until and unless patients have some “skin in the game” and are treated like adults who can shop for the best “deals” in health care.

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