Time bomb for health care costs?

Ever wonder what your doctor or hospital is really doing with the jacked-up "Total charge" that's listed on your bill? That's the one that lists $1,473.38 as the "Total Charge," but your insurance will "Allow" and the doc actually will accept $65.81….

Your correspondent was in the hospital recently for surgery that is more or less mandatory for many old men, I'll spare you the details, it was one overnight stay. I was in the hospital slightly less than 24 hours.I'm a completely happy, but completely confused customer. The hospital's "Total Charge" was $26,151.30, but it accepted a mere $3,671.71.

Why is the "Total Charge" so incomprehensibly higher than the amount the doc or hospital will actually accept from your insurance company? (Let's leave aside for the moment what happens if you don't have health insurance….).

It seems like it's similar to saying "Our regular retail price is $7,999.99, but today only, our sale price is $249.99." Except for this difference: retailers are required by law to state a regular retail price that has some connection to reality, that is, some of the items must have been legitimately sold or offered at that price in the recent past. Also, people WANT to buy stuff from retailers.

No doc has a "Today's Specials" sign on his wall, with stuff like "Liposuction! Only $299!" No hospital advertises "This Week Only! Get an appendectomy for $1,399!"

That's because nobody WANTS to buy stuff from the doc or the hospital. They're the last resort when we're sick or hurt.

So why is the "Total Charge" so unimaginably high? What reference does it have to reality? More or less, no one ever pays anything even close to that amount. Is this the health care provider's wacky way of setting up the perpetual negotiating position with health insurance companies over what will be paid for your procedure? Is this some murky legal positioning, anticipating some future federal health care cost reform, when there will be high stakes national bargaining on how much health care providers will be paid?

I'm pretty sure about this: the hospital's "Total Charge" has no connection to any economic reality. If every patient who goes to my hospital this year would actually pay the "Total Charge," good old St. Mary's General would have more money than General Motors, they'd have to build a new hospital wing just to hold all the money.

Health care reform two steps forward, one step back...