How to Charge $546 for Six Liters of Saltwater

the best solution is obviously some kind of public-private partnership, so that we can get the best parts of the public sector with the best parts of the private sector. There's no way we'll wind up with the worst parts of both.

> Copy the health care system of any other rich country.

This is easier said than done. The link between socialism, still a profane political philosophy, and municipal health care is too strong—the time it would take to switch it over is be on the order of election cycles, not years. Granted, we are already on that road, but it's going to be a long time before any mainstream politician embraces it.

One of the big reasons for this problem is Medicare. The reimbursement that Medicare offers is often far less than it costs the hospital. Why does Medicare not cover the cost of a procedure? Usually because it did cover it in the past (to the point of generosity) and providers reacted by shifting their services to maximize the profits.

A good example is the infusion of drugs. Medicare pays ASP+4% (just cut from +6% due to sequestration). If you're a clinic that doesn't get a discount on their drugs (mostly community based clinics) you're often paying more for the drug than the gov't pays you (it's a net loss every time you prescribe the drug).

However, the gov't does pay a lot to infuse the drug. The result? Providers everywhere were starting their own infusion clinics and making a ton of money on it. The profit from infusion clinics would be used to offset the loss from the purchase of the drug. CMS clamped down on reimbursement for infusion services recently, but it's still a profit center.

This happens all the time in the US healthcare system.

So what do hospitals do? They jack up the price on every item they possibly can. Of course insurance companies know what is up, so they negotiate much better rates for all of the items. However, for those who are uninsured, they pay the charge master rate which is very inflated.

The problem with the US healthcare system is not that's a free market, because it isn't. The problem is that's not a free market and it's not a fully regulated market, it's something in between. So what happens is that some regulations are put in place, some of which cause certain procedures to be unprofitable, so providers simply shift those costs to the un-(or less) regulated prices.

Turns out, it is.

Even if one is willing to accept them into one's general worldview... First principles - like "government is wasteful" - only go so far in the face of conflicting data. And there is a lot of it on the topic of healthcare systems.

I think there are 2 big factors that always seem to be missing from these investigations. The high costs offsets individuals who don't pay for their healthcare. Keep in mind that the hospital must treat anybody who walks in the door and they frequently do not get reimbursed by the government. Also keep in mind that the solution must be perfect when it physically cannot be. Because if there is a .0001 percent chance of failure, every doctor that treated the patient gets sued, the hospital gets sued for several million, the manufacturers gets sued, the middle man gets sued, heck the receptionists probably gets sued too. Think of the costs of insurance for every party involved. Obstetricians often pay $85,000 to as much as $200,000 for malpractice insurance. That's just the doctor.

Reduce the malpractice payouts and shield doctors like other countries do. Make the government absorb more of the costs for care. The price could probably be cut by 200 to 300 bucks.