The opioid crisis


Btw, interesting book on opioid crisis is Dreamland by Sam Quinones - worth reading.


Yeah I said that already. I am aware of how this works, but to say their cost is on par with out-of-network suggests that 18k in billed charges would be a norm for a 100 dollar urine test. I am challenging that statement. The percent of billed charges payors, those would be in network because I am now talking about a specific kind of contract, would probably question that even though they often have a ordinary cost/billed charges clause with that.

I don’t think that’s clear. They make it sound like some bureaucrat/office person decided this woman needed a test against the woman’s physician’s judgment. The surgeon is also her provider and a doctor.


Oh that does look interesting.


Oh dear @brooski, three replies when one would have worked? tsk3


Improve your mobile functionality, boss!


Have you considered improving your mobile functionality? Eh? EH?


/whacks self on head … BUT OF COURRRRSE!


This incident is a good example of the hard empirical proof that market forces just don’t work in health care like they do in most markets.

One of the reasons market forces are the best economic tool we humans have developed is that they are very efficient at setting price. “Everything is worth what its purchaser will pay for it.” For the vast majority of markets, that works great.

But it doesn’t work in health care b/c unlike most markets, if you don’t get exactly the health care produce you need exactly when you need it, you can die or suffer grievous disability or pain. The fancy econ term is “inelastic demand”. Due to inelastic demand, market feedback on price doesn’t work like it does in most markets and purchasers have grossly reduced “bargaining power” which causes prices to rise far past normal inflation and also causes ridiculous inconsistency in pricing.

You can see this by imagining the testing overcharge incident occurring in gaming. The lab charged $17,000 for a batch of procedures that most labs will accept $100 for, in network. That’s a 170X magnifier, a 17,000% increase. If you applied that to your typical $60 A-List game, that would be like a store charging $10,400 for a video game, (without the spacesuits and cockpit).

That would never happen b/c not only would customers not pay $10,400 for a game they could easily buy elsewhere for $60, a store that even tried to charge a 17,000% markup would be brutalized by the market feedback and would lose huge goodwill. I mean, sure, some store might do it as a stunt, but in terms of real transactions, market forces would punish a store who tried that routinely, and thus you will never see it in games, or in the vast majority of markets.

Except healthcare. In healthcare, different providers can have widely varying “list prices” which range from double or triple what they usually accept up to hundreds of times what they usually accept.

Just by itself, that fact is empirical evidence that relying on market forces as a primary means is just never going to fix health care. It can’t. Unlike most of the economy, market forces don’t set efficient or reasonable prices in health care. And there’s a clear reason for that: inelastic demand.

Which means no matter how much a chunk of American politicians want market forces to fix health care, it’s just never going to happen.

The only way forward on health care prices is with some form of government intervention. That doesn’t necessarily mean full blown prices controls; there are a variety of methods like all-payor rate setting or “average network fees” rules which can accomplish a lot of good while still maintaining some market element.

Until we accept that, health care prices in the US are going to remain a mess.


The other factor is price transparency. In the US especially, actual costs to deliver health care are nigh impossible to get in order to shop around (example above being, why the f*ck was this sent to an out of network provider when there was most likely an in-network provider to do the testing and said testing could be done in any of a number of places at a better cost, but the consumer wasn’t notified of this up front).

The lack of price transparency dovetails with the demand in-elasticity to compound the issue.


One might suspect this is the result of a backdoor shady deal someone has with this lab.


One might. However, having written probably thousands of surgery-related opioid prescriptions myself, I can tell you that what is far more likely is that the internist who asked for the test gave the patient a “prescription” for the test (really a paper order), the patient took it to the closest lab that was convenient to them or saw that lab’s advertising and chose them, neither provider nor patient considered the insurance coverage, and there you have it.

Note the lab’s strategy: charge $17k. Settle for $5k. Next patient.

This is abusive and fraudulent to be sure. I suspect it will lead to eventual regulator action. But it is a shame nonetheless.


I wasn’t thinking of the doctor. There are a lot of staff that could influence a patient to use a specific lab, especially if they have a financial motivation to do so.


If a staff member were regularly directing patients to labs that were overcharging for tests, the physician’s office and the physician would know pretty quickly, because the first place patients go with insurance complaints is to the performing/prescribing doctor, and unhappy patients are an absolute killer for a practice. The person in question would be fired fast.

I know that it helps to ascribe these kinds of things to malevolence because this explains things that otherwise seem to be due to chance or unknowing choices and thus seem out of control and dangerous. But my experience is that systemic issues are a far more likely cause than collusion/conspiracy.


According to the NPR writeup the woman didn’t take her sample or prescription to the lab. Instead, she left the sample with the hospital, who then sent it to the lab, apparently without verifying network status.

There are so many things wrong with that…


It’s not that uncommon. I wound up with an out-of-network lab, and I got out of paying it too. The problem is this… I went to a lab that was in network. I did not know at the time that they could not perform the test, so they sent the test to another lab, and that lab was out of network. This makes it very difficult for patients to know their cost and ensure everyone who touches their visit is actually in-network because they don’t have any control over reference labs or referred test. Now go ask the lab why they’re out of network, or the why so many NICU physicians and staff our at out of network, or anesthesiologists and so on.


I’m not sure what you mean, “go ask them why?”
It’s pretty clear why a provider would be out of network: because the provider has declined to sign a contract with that particular insurance company, probably because the terms of that contract are unsatisfactory. So they are free to charge higher prices.


That’s what I mean. They want more money, but who usually gets the flack for this… not them. The patients are going to complain about the system they used, not the fact there are, in some cases, entire specialists that won’t participate.


My apologies if this has already been posted:

I didn’t realize that there was an opium crisis after the civil war:

Based on contemporary accounts, it appears that the epidemic of the late 1860s and 1870s was probably more widespread, if far less intense, than today’s — a response to the way in which the war tore up settled ways of life, as industrialization transformed the landscape, and as huge social change generated acute emotional distress. This aspect of the epidemic — as a response to mass social and cultural dislocation — was also clear among the working classes in the earlier part of the 19th century in Britain. As small armies of human beings were lured from their accustomed rural environments, with traditions and seasons and community, and thrown into vast new industrialized cities, the psychic stress gave opium an allure not even alcohol could match. Some historians estimate that as much as 10 percent of a working family’s income in industrializing Britain was spent on opium. By 1870, opium was more available in the United States than tobacco was in 1970.


That is an amazing article. Very well written.

BTW - how did this country deal with the opium crisis post-civil war?


I’m gonna guess that a lot of the people misusing opioids died. Problem solved! (I don’t advocate that as a solution, I’m just saying that’s probably what happened).