Remember When I Said that It's Not the Cost of Healthcare, It's the Price of Healthcare*

Well, the New York Times just looked at the price of a 1 liter bag of saline solution, and it ain't pretty:

It is one of the most common components of emergency medicine: an intravenous bag of sterile saltwater.

Luckily for anyone who has ever needed an IV bag to replenish lost fluids or to receive medication, it is also one of the least expensive. The average manufacturer’s price, according to government data, has fluctuated in recent years from 44 cents to $1.

Yet there is nothing either cheap or simple about its ultimate cost, as I learned when I tried to trace the commercial path of IV bags from the factory to the veins of more than 100 patients struck by a May 2012 outbreak of food poisoning in upstate New York.

Some of the patients’ bills would later include markups of 100 to 200 times the manufacturer’s price, not counting separate charges for “IV administration.”

And on other bills, a bundled charge for “IV therapy” was almost 1,000 times the official cost of the solution.

It is no secret that medical care in the United States is overpriced. But as the tale of the humble IV bag shows all too clearly, it is secrecy that helps keep prices high: hidden in the underbrush of transactions among multiple buyers and sellers, and in the hieroglyphics of hospital bills.

At every step from manufacturer to patient, there are confidential deals among the major players, including drug companies, purchasing organizations and distributors, and insurers. These deals so obscure prices and profits that even participants cannot say what the simplest component of care actually costs, let alone what it should cost.

And that leaves taxpayers and patients alike with an inflated bottom line and little or no way to challenge it.

………

But even before the finished product is sold by the case or the truckload, the real cost of a bag of normal saline, like the true cost of medical supplies from gauze to heart implants, disappears into an opaque realm of byzantine contracts, confidential rebates and fees that would be considered illegal kickbacks in many other industries.

………

The charges included “IV therapy,” billed at $787 for the adult and $393 for the child, which suggests that the difference in the amount of saline infused, typically less than a liter, could alone account for several hundred dollars.

………

Eventually the head of the family, an electrician’s helper who speaks little English, complained to HealthFirst, the Medicaid H.M.O. It paid $119 to settle the grandmother’s $2,168 bill, without specifying how much of the payment was for the IV. It paid $66.50 to the doctor, who had billed $606.

Ms. O’Neill defended the markup as “consistent with industry standards.” She said it reflected “not only the cost of the solution but a variety of related services and processes,” like procurement, biomedical handling and storage, apparently not included in a charge of $127 for administering the IV and $893 for emergency-room services.

The patient, a financial services professional in her 50s, ended up paying $100 for her visit. “Honestly, I don’t understand the system at all,” said the woman, who shared the information on the condition that she not be named.

Dr. Frost, the anesthesiologist, spent three days in the same hospital and owed only $8, thanks to insurance coverage by United HealthCare. Still, she was baffled by the charges: $6,844, including $546 for six liters of saline that cost the hospital $5.16.

At White Plains Hospital, a patient with private insurance from Aetna was charged $91 for one unit of Hospira IV [saline] that cost the hospital 86 cents, according to a hospital spokeswoman, Eliza O’Neill.

The charges all stem from a case of food poisoning  in upstate New York, where people were collected by ambulances and sent to emergency rooms.

This is why price controls are necessary.  When you are, "lying on the ground barely conscious," the market ceases to function.

^*Here, and a lot on the Stellar Parthenon BBS as well.