How a Medical Catastrophe Can Bankrupt a Life
Having worked in a tech startup adjacent to healthcare insurance one of the biggest reasons healthcare costs are out of control is largely a result of how healthcare is billed. Most consumers (i.e. those insured under an employer-offered plan) are very far removed from the actual price of a service because, assuming a medically necessary service or drug is covered, you are paying up to some deductible, coinsurance, or copay but usually never anything that closely resembles the retail price. Most insurance companies operate off a &quot;network model&quot; where they go out and negotiate contracts with different providers&#x2F;hospitals to get discounted rates that are usually pegged to Medicare prices (which is as low as the prices go). Large employers can negotiate good rates through insurance companies as well to drive prices down to control their own healthcare costs.<p>The opaqueness with which care is paid means that consumers receiving care have little incentive to shop around for prices, quality, value, etc., which means providers can basically charge whatever they think the gov&#x27;t (through medicare&#x2F;medicaid) will pay and a percentage above medicare&#x2F;medicaid for everyone else. Of course, if you are uninsured or go out of network (i.e. your insurance company has no contract with the provider you saw), then you&#x27;re going to be asked to pay ridiculous retail prices that very few people actually ever pay.<p>If you look at the difference between price trends for elective vs non-elective care (i.e. cosmetic surgery, LASIK, cosmetic dermatology), prices for non-elective care outpaces elective care by a long shot with the main difference being consumers pay out of pocket for elective care and actually put pressure on prices whereas consumers do not for insurance-covered non-elective.<p>The reality is that if you are ever in this situation you should ALWAYS negotiate. There&#x27;s a reason medical debt is bought for pennies on the dollar because 1) difficulty actually collecting &quot;patient responsibility&quot; in the first place and 2) everyone know these retail prices are completely BS.