You go to your local urgent care with a headache and a fever, and the doctor suggests a trip to the hospital for further evaluation — just to make sure there isn’t anything serious causing your symptoms. She offers an ambulance, and you accept. You could probably walk or Uber, but you’re not feeling well, and the doctor has offered to arrange the ride. Why not?
This was the story of Joanne Freedman. She didn’t think too much about it, until she received a $900 bill for the two-block ambulance ride she took to the hospital. While Joanne’s experience was particularly egregious, it is not wholly uncommon. Ambulance pricing is one of the most variable and least transparent components of health care costs, with rides ranging from tens to thousands of dollars. This is in part because there are many ambulance providers, and they all have different relationships with different insurance companies. It’s also in part because ambulance rates are generally set according to the services the ambulance is equipped to provide, not necessarily the services actually provided. Some ambulance companies have contracts with municipalities that make them the only game in town, while others are in more diverse markets with multiple providers competing for patients. All this combines to create an incredibly complex industry with very little consistency from ambulance to ambulance.
But is this disjointed, free-market system the best way to structure emergency transportation? The arguments underlying the justification of a free, unregulated market hinge on the ability of consumers to police the industry through choice. If the seller of a good sets the price too high, consumers will buy from a different seller until she brings the price down to what consumers are willing to pay. This is, in theory, what allows markets to find the right prices for goods and services more efficiently than any government agency or regulator ever could. Continue reading