Gouging the Gougeable: Yet Another Triumph of the American Health Care System

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Len Charlap has had a couple of outpatient echocardiograms recently. Elisabeth Rosenthal tallies up the damage:

The five hospitals within a 15-mile radius of Mr. Charlap’s home here charge an average of about $5,200 for an echocardiogram, according to an analysis of Medicare’s database. The seven teaching hospitals in Boston, affiliated with Harvard, Tufts and Boston University, charge an average of about $1,300 for the same test. There are even wide variations within cities: In Philadelphia, prices range from $700 to $12,000.

….In other countries, regulators set what are deemed fair charges, which include built-in profit. In Belgium, the allowable charge for an echocardiogram is $80, and in Germany, it is $115. In Japan, the price ranges from $50 for an older version to $88 for the newest, Dr. Ikegami said.

Because Mr. Charlap, 76, is on Medicare, which is aggressive in setting rates, he paid only about $80 toward the approximately $500 fee Medicare allows. But many private insurers continue to reimburse generously for echocardiograms billed at thousands of dollars, said Dr. Seth I. Stein, a New York physician who researches data on radiology. Hospitals pursue patients who are uninsured or underinsured for those payments, he added.

This is now such a common story that it’s hard to work up the outrage it deserve. Is this practice corrupt? Merely venal? Or just crazy? I don’t even know anymore. What I do know is that if an outpatient echo costs $80 in Belgium and $500 via Medicare, there’s no conceivable justification for a $5,200 charge. It bears no relationship to the actual cost of the test, and is designed primarily to gouge the occasional uninsured patient who has no choice in the matter along with the (inexplicable) occasional insurance company willing to pony up even for obviously outrageous charges. One of the hospitals that performed an echocardiogram on Charlap didn’t even bother denying that this is what they’re doing:

In a statement, the hospital in Princeton that performed Mr. Charlap’s first, more expensive echocardiogram noted that “the vast majority of customers” paid much less than the listed prices. It added that its pricing reflected the need to offset losses because many programs, including Medicare, reimburse less than the cost of delivering services.

I doubt that Medicare is reimbursing less than the cost of performing an echocardiogram, but you can see what’s going on here. The “vast majority” of patients do indeed pay far less than list price. So why have such a high list price? In order to gouge the tiny minority who are gougeable.

It’s lovely the way American medicine works, isn’t it?

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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