In a sane health care system the same basic services would cost about the same everywhere. Prices should be roughly identical across hospitals with only a modest variation based on issues like cost of land, number of personal, and volume. This is how it works in most of the world but now how it works here.

A new study in BMJ Open looked at the prices of common blood tests in California and found prices varied as much as 1,000 fold. From the research’s results:

Our findings demonstrate the wide variability in charges for 10 common blood tests performed at California hospitals in 2011, as well as the hospital-level factors that explain some of that variation. We found that a patient could be charged as little as US$10 or as much as US$10 169 for a lipid panel, depending only on which hospital they visited. Eight of the 10 blood tests had coefficients of variation greater than 200%. For comparison, prices for consumer electronic goods have an average coefficient of variation of 12.5%.

The paper concludes:

Charges for 10 common blood tests performed at California hospitals vary widely across hospitals, with charges for a lipid panel, for example, ranging from US$10 to US$10 169. Though hospital ownership and teaching status were correlated with charges for many blood tests, few other hospital or market-level predictors significantly predicted blood test charges. At most our models predicted 21% of the variation in charges for these identical services.

This insane level of disparity exists across all services in the system but the fact it exists in something so standard is especially telling. You can’t look at data like this and not come to the conclusion that the system is deeply and profoundly broken. If a necessity, like a hospital, is able to essentially just make up prices there is a clear market problem.

This is why basically every other first world country either sets health care prices directly by being the single payer, or they use an all-payer system where a fair price for everyone is collectively negotiated.

Having every hospital individual negotiate every price for every service with every payer doesn’t just create a massive amount of administrative spending, it also allows them to dramatically rip people off. The core problem with American health care comes down to the fact that the government refuses to step in to keep people from being ripped off by the industry.