Photo: Flickr / Anoto AB
In a fascinating Marketplace podcast, economics reporter Gregory Warner took a closer look at how prices for medical procedures are set.Turns out it all happens behind closed doors. As if they’re asked to defend their professions, doctors on a secret committee of the American Medical Association, the Relative Value Update Committee (RUC), measure all the variables that could go into a procedure, such as rolls of gauze and minutes spent with a patient. The RUC then assesses the value and everyone votes on a price.
But not everyone’s happy with the outcome, least of all doctors. And taxpayers won’t be either after reading what follows.
As Ear, Nose and Throat Dr. Charles Koopman explains, he once presented a treatment that used tiny plastic balloon to widen the sinus cavity, knowing the pricy balloons ($2,600/each) could be used several times. But because the RUC sets health care procedure prices so low, Koopman says his peers “had no choice to overcharge” and bill Medicare “$18,000 for balloons (the doctors) didn’t need or buy.”
This means taxpayers are overpaying for medical treatment either way, whether it’s out-of-pocket upfront or via a check to Uncle Sam.
And we all know out-of-pocket costs aren’t getting any cheaper. YM contributor Stephanie Taylor Christensen pegs the average doctor’s visit at $199, but says patients can expect to shell out $1,275 on average for an outpatient hospital visit.