American healthcare

Much has been written [1] about the American healthcare system and why it fails us, especially for those not in the top 10% [2]. I'm by no means an expert, but over the years, I've often come back to a story I heard from someone at a dinner party a few years ago. We'll call him Paul.

Paul's girlfriend, Tina, needed to get a standard panel of blood tests. She found a clinic, went in, and got her tests done. Two weeks later, she received her results, together with a bill for $5,000.

As it turns out, Tina made a mistake and went to an out-of-network clinic. Panicked, she called her insurance company. Unsurprisingly, they weren't very helpful. Despite her pleading, she was told their maximum was $1,500, that her reimbursement check was in the mail, and that's all they could do.

As a last-ditch effort, Tina called the receptionist at the clinic that did her bloodwork. She explained her situation, not expecting much. Without taking a breath, or even passing Tina to accounting, the receptionist immediately offered something unexpected. "If you can pay by credit card right now, we can settle everything for $500."

Shocked, but not willing to risk her good fortune, Tina took the offer and paid over the phone. A few days later, the $1,500 reimbursement check from her insurance provider arrived. Tina cashed the check, and went shopping.

I don't approve of Tina's ethics, but I thought the story explained much about why our healthcare is so expensive. We've created a system where every party is incentivized to use opaqueness and lack of transparency against everyone else.

[1] I'd start with Catastrophic Care by David Goldhill.

[2] One of many convincing charts, this time from OECD.

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