In the US, medical billing is a complex system where the same procedure can cost an order of magnitude different from one person to the next. Sometimes it’s hard to know what something is going to cost, and the patient is frequently not in the best of condition to do a cost benefit analysis.

Many people have private insurance policies. These policies typically make a distinction between in-network and out-of-network charges. In-network charges are for services provided by health care organizations which have contracted with your insurance company, offering to provide services for the company’s fee schedule. In return they have access to more patients. This is a voluntary contract between two parties which we should have no problems with.

Many policies allow the patient to freely choose whether to go to an in-network provider or go outside the network and accept the, potentially significant, higher prices. Presumably if you care, you will do your research ahead of time and know that, if you need to go to the emergency room, it would be better to go to hospital A which is “in-network” and not hospital B which is “out-of-network”. You might have to drive a bit farther, but unless you are in cardiac arrest, it’s probably not a big deal.

So you go to hospital A’s emergency room, get handed a big stack of forms, fill out what you can and they call you in for the doctor to see you. The physician doesn’t actually work for the hospital, it is a separate organization that contracts with the hospital – but might not be on your preferred provider list. You will get a bill for his services. The doctor asks you a few questions and then orders some lab tests.

The blood gets drawn and sent to the lab. We’ll leave aside for the moment who the person who draws the blood works for, but it could matter. The blood arrives in the hospital’s lab. However the hospital’s lab may not actually be part of the hospital but a laboratory operating company which rents space in the hospital – and bills you separately. Is it “in-network”? Who are you going to ask? And that thyroid panel the doctor ordered. They don’t do that in-house, they send it to a reference lab which bills you separately. And, well, who knows if it’s in network.

You tell the doctor about your headache and that you had fallen earlier. He decides it would be safer to send you up to get a CAT scan. Who owns the CAT scan? Will you get a bill for that? And the radiologist who looks at the results and reports, “no abnormalities noted” (after all, it was just the Doctor’s CYA) may not work for the company that actually runs the CAT scan. And …

So, how do you do your research to see if you are really “in-network”?

This is the kind of thing that makes people say “there ought to be a law”. And, California being California, there now is one. But we don’t like the government solving problems like this. What is a good free market solution?