How Prices Are Set In Health Care

July 28th, 2013

This is how prices are set in our health care system:

This seemingly miraculous proficiency, which yields good pay for doctors who perform colonoscopies, reveals one of the fundamental flaws in the pricing of U.S. health care, a Washington Post investigation has found.

Unknown to most, a single committee of the AMA, the chief lobbying group for physicians, meets confidentially every year to come up with values for most of the services a doctor performs.

Those values are required under federal law to be based on the time and intensity of the procedures. The values, in turn, determine what Medicare and most private insurers pay doctors.

Pricing signals at work. Or, in this case, not at work. At all.