Grayson story

Alan Grayson's $69,240 hospital bill

I broke my leg a few months ago, playing basketball with my kids. (Note to self stop lunging for every loose ball I see.) I actually sat cross-legged on the court fora few minutes, thinking that the pain would go away. It certainly did not.

My wife took me to the hospital, where X-rays showed that the part of the bone inside my hip looked like someone had hit it with a sledgehammer. My surgeonexpressed extreme skepticism that he could put it back together again. He recommended a hip replacement, which puts a metal head and a plastic shell in place of the ball and socket inside your hip. I said fine.Not being Henny Youngman, I refrained from asking him whether I would ever be able to play the piano again.

The surgery took place the morning after I was admitted to the hospital, and I was released two days after that. Less than 72 hours from in to out. The hospital bill was $69,240.That’s just the hospital bill. The surgeon, emergency room doctor and physical therapist all billed me separately.

Admittedly, this bill was on the high side. According to a report by the International Federation of Health Plans, the average hip replacement in the United States in 2015 cost $29,067. Only the most expensive five percent of hip 1replacements here cost $57,225 or more. Somehow, my hospital bill alone was more than that astronomical sum. But even $29,067 is a very pretty penny. (Blue Cross, my insurance carrier, said no to the $69,240 hospital bill, and paid $32,395 instead – which is still a lot of money. I paid a $500 co-payment, having already paid my deductible for the year.)

I worked for four years as an economist. Economists associate the price of things with their cost of production. (Specifically, their marginal cost of production, but for present purposes, that’s an unnecessary nuance.) In a free market, competition is supposed to drive prices down to the cost of production. What did it cost the hospital to host me for those three days? It had to pay the nurses, but there certainly were fewer nurses than patients, so at most we’re talking about three days of nurses’ pay. It had to pay for the metal and plastic parts that the surgeon put inside me, and the surgical glue that was used to close me back up, which are mass-produced. (2.5 million Americans have replacement hips.) The hospital had to buy the medicine that it gave to me, which was modest, because I’m really not into opiates. It had to buy my gown, the kind that ties in the back. It had to feed me eight meals of hospital food. It had to pay for the electricity and water for my room (and the cable TV, which I did not use, but thanks anyway.)

The hospital had to pay for one hour’s worth of time in a surgical room, which I never got to see because I was under general anesthesia during that hour. (I hate the sight of blood, especially mine.) It had to pay for three days’ worth of time in the room where my hospital bed was located, one of 211 in that hospital. My hospital opened in 1993, so those costs have been amortized over 24 years already.

Let’s say that each bed cost $100,000 to build, 24 years ago. Amortize that over a quarter of a century, and it works out to $11 a day. The hospital didn’t have to pay the doctors, because they billed me directly. It didn’t have to pay taxes, because it’s a nonprofit. Perhaps I’m simply obtuse, but I’m not seeing $69,240 in costs here.

The International Federation of Health Plans helpfully notes that the exact same surgery costs $16,225 in the UK, one of those “socialized medicine” countries that Fox News always warns about. That’s half as much as the cost here. In Spain, a hip replacements costs $6757, less than a quarter of the cost in the United States,and less than a tenth as much as my hospital bill. Why would the same surgery cost $29,067 in the United States, $16,225 in the United Kingdom, and $6757 in Spain? Well, our hospitals don’t really compete against each other; in Orlando, two hospital chains own pretty much everything. Our insurance companies don’t really compete against each other; in Florida, Blue Cross alone has almost half of the market. (Across the state line, in Alabama, it’s 92%.) Both the hospitals and the insurance companies can charge almost whatever they want, provide as little as possible in return, and keep the difference.

My hip replacement surgery went very well. Two weeks later, I was walking without assistance. Two months later, I walked eight miles in one day at Petra, in Jordan. As to the quality of my care, I have no complaints. And I concede that my health is more important than the cost of care. But $69,240 for one hour in surgery and three days in the hospital? Come on! We spend more money on health care than any other country, our life expectancy is fiftieth in the world, and even now, one tenth of us have no health coverage. People wonder how we can spend so much, and enjoy so little in return.

As I see the GOP begin its ruthless gutting of Obamacare, I feel constrained to point out that regress is not progress. Better health, less cost. What’s so complicated? And is that asking so much?

Alan Grayson