<p>Hi, I was just wondering how expensive is a conoloscopy? My family medecine doctor said it was around 6-10K dollars. Was he serious?</p>
<p>I mean, I think a conoloscopy is just sticking in a camera into your rectum to watch your bowels, so why should it be so expensive? It’s just slightly cheaper than a car, lol.</p>
<p>Thanks for reading.</p>
<p>-Watson&Crick</p>
<p>It’s colonoscopy. And no, it is not that expensive. The procedure takes about 15 to 30 minutes, glorious color photographs included.</p>
<p>Probably 1-2k.</p>
<p>Colonoscopy Current Procedure Terminology [CPT] codes 45378-45385 for professional fees likely run $650-1000. Facility fee will be an extra $200-500.</p>
<p>Most providers will give a substantial discount to “cash pay” patients with no insurance.</p>
<p>Be sure to canvass free clinics and county clinics as they may have access to some specialists who will do the work for free.</p>
<p>Your doctor was joking. If not, he’s trouble and should be avoided at all costs!</p>
<p>In markets that are not perfectly competitive, the price of an item will be somewhere between its marginal cost (the cost of producing the item) and its marginal willingness to pay (how much it benefits somebody).</p>
<p>A colonoscopy, by serving as a screening tool for colon cancer – along with many other diseases – has a very high value to patients.</p>
<p>BDM’s pulling out his fancy economics on this one!</p>
<p>Unfortunately, BDM’s economics are not fancy enough. With medical procedures in the US, for most people we have a complete market failure: the decision to use the service (the doc), the person who benefits from this decision (the patient) and the one who pays the bill (the insurer) are each different. So marginal cost/marginal benefit, not to mention indifference curves and all the rest, are irrelevant. </p>
<p>BTW, such competitive markets as BDM outlined also assume adequate price information is available and a competitive market. Price info, competitive markets in health care? yea, right.</p>
<p>Other than that, fine suggestion.</p>
<p>^Nice. /<em>gfgg</em>/</p>
<p>Of course NMD is correct.</p>
<p>The underlying philosophy behind my comment was:</p>
<p>1.) Use the simplest explanation adequate to explain the observations. Even a market without insurance and with excellent pricing might still have colonoscopies priced above marginal cost.</p>
<p>2.) Use the most general explanation which is adequate to explain the observations. W&C’s post above could easily have been talking about gas prices, or Legos, or restaurant food, all of which are priced above marginal cost thanks to partly monopolistic markets. In general, the question of, “Why is something so expensive?” is often related to MWTP, not MC.</p>
<p>BDM,</p>
<p>I was just giving you a bit of static, actually your post makes a lot of sense. In a way it is too bad, as the market failure tells one a lot about why health care economics are a mess.</p>
<p>In recent years, there has been a push for what is called “consumer directed” and “high deductible” health insurance to bring adequate market forces back into health care. Now that it is insurance open enrollment season, I’ve looked at several of these plans. You would not believe how difficult they are to understand, and how hard it is to make the numbers work better than traditional health insurance. </p>
<p>BTW, a great example of what BDM is talking about regarding prices is the price of attendance at elite colleges. In fact, conventional economic theory would argue that the prices should be higher, given the demand.</p>
<p>This is relatively embarassing for an economics major, but that was a case study that always confused me. Was the argument that college education is partly capturing the benefits of all of the rest of your lifetime income? Or was it that productivity was increasing the benefit to tuition? I felt like if I stared hard enough at something I could usually understand it after a few minutes, but this always evaded me. The only other thing I had trouble with was the graphical link between decreasing marginal returns and risk aversion, but I got even that eventually.</p>
<p>BDM, the argument for higher prices for elite colleges is pretty simple: Ignore the supply curve, as it is complex (either very steep, with a very low marginal cost for an additional student, or very flat if you consider the cost of housing, lab space and such). The key is to consider the market clearing price: that price where demand just balances supply. Variants of a “dutch auction” actually formalize this practice in a bidding context.</p>
<p>BDM, you also touch on another issue: the value of a college education. And an even more interesting one is why employers pay more for graduates of elite college or graduate programs. For example, why should graduates of the very top MBA programs receive a salary premium over grads of more humble programs? (medicine is more complex because of the residency match program, which appears to be designed to save hospitals tons of money and effort in recruiting desired talent. Yet it is sold as a benefit to prospective residents. go figure)</p>
<p>Part of the issue, though, is that demand strikes me as partly endogenous to supply – that is, the more spots Harvard opens up, the less any given spot is worth.</p>
<p>The major issue that confuses me is why college tuition rises faster than inflation over a given period of time – a truth which my introductory courses all thought should be self-evident and so never explained. Is it just that college is partly capturing the inflation, not just of the time, but of the entire future of your career and the added value as a percentage?</p>
<p>BDM, I agree with your first statement, which is why I said to ignore the supply curve and focus on the market clearing price concept. In fact, one might argue that a Harvard education may be one of those rare luxury goods where marginal demand increases with price. But set that aside for now. I think we agree that increasing the number of spaces is likely to dilute the brand value. </p>
<p>Regarding why college tuition rises faster than inflation, let’s break this down into components. Of course an economist would say that the prices go up because consumers are willing to pay more. But college tuition pricing is more complex than this, as it exists in an environment of social pressures, too.</p>
<p>The conventional (and the institutional) answer to your question is that college costs are primarily labor, and labor costs rise faster than inflation. Personally, I don’t believe this, as my own personal experience, when I was at one of these major universities, was that salary increases tracked the CPI, but did not exceed it. Certainly also a number of elite colleges have been engaging in an amenities war (having the best labs for star researchers or the best climbing wall for students and such), but I don’t think that is the whole answer either. finally, the tuition charges have nothing to do with future earnings power of their grads. They’ll tap into future earnings with alumni fundraisers. Rather, I think the truth is that they charge what they do, and increase by the same 5-6% each year because they can without too much revolt from students or the public at large. Note that all similar private universities charge about the same. this is true for undergrad, grad and even med school. Note that they raise fees by similar percentages year after year. This is classic oligopolistic pricing behavior. The wonder is that the feds have not stepped in.</p>
<p>Back to the day job…</p>
<p>I guess the main question on my mind is:</p>
<p>1.) Why is MWTP so high? Is it just excellent marketing? Self-selecting among a pool of mostly wealthy buyers in the first place? Does it actually add that much value?</p>
<p>2.) Why is MWTP rising faster than inflation? In other words, what is changing about the answer to question #1? I can understand high prices, but why didn’t they simply start off obscenely high and just keep rising with inflation?</p>
<p>BDM,</p>
<p>1). Self selecting among wealthy? You betcha. Add value? Wrong question! The buyers (ie kids and parents ) perceive it adds value. The perception is what matters.</p>
<p>2). Remember, for most things, inflation has nothing to do with pricing. (we’re not in a cost+ world, after all). So your last question is the key. I’ve wondered myself why the top schools don’t charge more. I don’t know why, but the fact that they choose to price their product the same as their competitors tells us they are neither revenue maximizers nor competing on price. </p>
<p>To me, the interesting part is how successfully the top schools have marketed their product and built their image. such that folks salivate at the opportunity to pay these already huge tuition bills.</p>
<p>Just excellent marketing, wealthy clients, and oligopoly. Those all make sense. That helps me understand why tuition is high; I’m still having trouble comprehending why it’s rising.</p>
<p>BDM, it is rising because they can get away with rises in the range of 5-6% annually. Why is that? Because the public is conditioned to it. </p>
<p>IMHO, elites set the pace for tuition increases. Others follow. The elites have found that price increases in this range do not lead to too much of a backlash. They’re concerned about several different constituencies: parents of prospective students (the least important IMHO - too many prospects to even count…), alums (probably the most important) and the public at large, especially the political component. The Hill regularly holds hearings on issues related to higher ed, and could quickly make life miserable for any elite U that steps over the financial line, so to speak. </p>
<p>So all these things (and no doubt more) force elite colleges (and hence the rest of the academic community) to hold the line on price increases at the mid single digit range. We’re used to these numbers, which curiously arose at a time when inflation was much worse. But never mind, that’s what they’ll do.</p>
<p>So, the bottom line is that price and hence price increases have little to do with costs of the seller, and everything to do with psychology among buyers and sometimes broader social issues. </p>
<p>BTW, you think higher ed pricing is tricky, take a look at the pricing of medical services. You have list price, HMO price, Medicare price, allowables under insurance policies, “reasonable and customary” which actually has nothing to do with “customary” and is often not “reasonable” and so on. Medical pricing and reimbursement makes higher ed pricing actually seem fair.</p>
<p>
Ah, makes sense.</p>