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Why Do Certain Surgeries Cost So Much?

, Why Do Certain Surgeries Cost So Much?

In recent years, explosive cost increases in the United States healthcare delivery system have prompted a closer look at how healthcare providers and health insurance companies calculate baseline prices for certain advanced medical procedures. Health insurance companies wield tremendous influence over the market price of local healthcare due to their ability to extend or restrict health insurance coverage based on their own internal policies. This means that local employers who provide health insurance to their employees must pay the premiums, and have very little leverage in negotiating for lower rates. Without a solid public option for citizens, for-profit health insurance companies compete only with each other in a given municipality. This has resulted in a continuous price creep as well as a gradual reduction in coverage for pre-existing conditions, as well as more advanced hospital procedures.  Hospitals provding neuosurgical services, orthopedic surgery services, and cardiothoracic surgery services are at the high end of the fee spectrum.

As a partial counter to health insurance companies’ growing influence over healthcare delivery, the Affordable Care Act of 2010 carries a mandate that health insurance companies may no longer discriminate based on pre-existing conditions. The Affordable Care Act also established an online marketplace for public health insurance options, as well as the Small Business Health Options Program (SHOP), an online market where small business owners can compare health insurance options for their employees.

While the Affordable Care Act represents an important step toward universal coverage (a system in which a government-managed fund pays for nearly all healthcare services rendered), it still does not address the main problem with healthcare spending: the fact that the government has relatively little leverage when bargaining with health insurance companies. For example, in a country with universal coverage, the government manages the public fund which pays for healthcare costs. The government also holds contracts for hospital procedures, surgeries, and medical products, which gives them tremendous leverage when choosing a manufacturer or healthcare provider to receive a national contract. Healthcare providers and product manufacturers therefore have tremendous incentive to make their products and services safe, effective, and affordable. This practice goes a long way toward eliminating the artificial price creep of private insurance companies.

In order for universal coverage to take root in the United States, there must be a strong public option that the government can use to negotiate with private health insurance companies. Though the Affordable Care Act makes important advances, such as mandating that small business owners with over 50 full-time employees must provide health insurance for their full-time staff, it still does not establish the principle of universal coverage in the United States. Until that point, healthcare delivery costs will continue to creep at an unsustainable pace.

health insurance companies, Affordable Care Act, universal coverage, small business owners





  1. victoria shumate

    I am writing this letter as a complaint about medical charges from Wake Forest Baptist Medical Center Winston Salem, NC, which I think is excessive.
    I would like to point out that I got excellent care during my stay at Wake Forest Baptist Medical Center.
    I am questioning charges in total of $763.50. I received my bill for my hospital stay for surgery on June 10, 2013. I noticed a charge categorized as “Cast Room” of $763.50. I called the billing department and asked for an itemized bill. I received the itemized bill and discovered that the “Cast Room” bill was really a daily charge of $254.50 for “Basic Frame with trapeze”.
    I called about this charge and learned that it was the bar above the bed attached to foot of bed to the head of the bed along with a trapeze handle. This item is used to help get up out of bed. I think these charges are excessive.
    I contacted a local home health equipment company to see what the charge would be if I rented this piece of equipment, and they told me the same item is $20 per month! This just seems unbelievable that a hospital can charge over 38000% above the price I can get this equipment for my home.
    I had similar surgery in 2009 there is no entry on this EOB for “Other Services” as in the current EOB. I only used this trapeze to get out of bed the first day of my hospital stay. I would have appreciated the therapist who did my therapy, and observed that I was not using it on day 2 & 3, to ask me if I needed this piece of equipment on my bed. If I would have known I was charged this excessive amount per day, I would have said “no, go ahead and take it off”.
    I accept paying an initial charge for the equipment since they had an employee come to my room and install the equipment, but a daily charge of this amount? I have paid my bill including one day of the $254.50 realizing this as a possible charge for labor, and the use of this piece of equipment for the first day, even though it took the employee less than an hour to put the equipment on the bed.
    Also, I am surprised the insurance company would accept this charge for this piece of equipment. My EOB shows my insurance company accepted $458.10 of this charge, this is unbelievable!
    I received a reply from the hospital billing that my procedure was billed under a DRG(diagnosis related group) methodology and basically this billing was a “package deal” and whether I used the equipment or not, it is still billed. They basically said they could not reimburse because of this methodology. The letter also stated that I am responsible for this charge. How can a hospital get away with charging this much for a piece of equipment?

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