Supply of Medical Services

How the Amish Drive Down Medical Costs

It is common knowledge that healthcare institutions such as the government (through Medicare and Medicaid) and HMOs are able to negotiate with hospitals for low prices due to their market power. Most individuals who pay out of pocket for medical services can expect face prices which are 30%-50% higher than those of Medicare patients.

A Wall Street Journal article on February 21, 2006 (Page B1) describes how Amish and Mennonite elders negotiated with the Heart of Lancaster Regional Medical Center in order to secure less expensive medical care for their fellow worshipers. After many members had visited clinics in Tijuana, Mexico for treatment, the Anabaptists decided a better option was to negotiate their own group rates with the local Medical Center for services such as orthopedic surgery, biopsies and childbirth. The elders threatened to abandon usage of the facility in favor of flying to Tijuana for the procedures if their demands for discounts were not met. As part of the final agreement, the members of the Anabaptist community were required to pay for 50% of the procedure up front in order to insure they would receive the discount. The WSJ continued:

Heart of Lancaster wasn’t worried about risking steep losses if elaborate surgeries went awry: Anabaptist patients generally don’t want such procedures. “If you’re paying out of pocket, you’ll hunt for bargains,” says Lee Christenson, chief executive of Heart of Lancaster, who bargained with the Anabaptist elders. “Basically, the Amish won’t pay for health care they don’t need.”