I recently started building products focused on healthcare affordability in the US. As I was ramping up on a new space, the biggest question that sparked my curiosity was: how did we get here? This question is the inspiration for this weekly series chronicling the decisions, accidents, and breakthroughs that built the US healthcare system.
Mathe shared a fantastic post by David Oks that made for a powerful sequel to last week’s post on “EMTALA”. I’ll weave David’s notes (which you should read in full) with some additional context as we continue pulling on the thread of “how did we get here.”
In July 2023, a 25-year-old named Jagdish Whitten was hit by a car crossing a street in San Francisco. He waved off the ambulance that arrived and called a friend instead.
Doctors found a mild concussion, a broken toe, some bruising. Because of the traumatic nature of the injury, they transferred him to San Francisco General — the city’s only trauma center. This time he had no choice. A six-mile ambulance ride, an evaluation, and he was sent home the same night.
Weeks later: a bill for $12,873 or $737 per mile traveled. $314 for cardiac monitoring. $151 for infection control. $11,670 as a “base rate.” After an appeal, his insurer covered $9,967. Whitten paid $2,900 out of pocket — more than any other part of his hospital experience — for a ride he never chose.
This is not an anomaly. About half of privately insured Americans who take an emergency ambulance ride receive an out-of-network bill. A 2024 poll found 23% of Americans have avoided calling an ambulance because of cost.
To understand why, we need to go back to 1965 — and to a vehicle that served two purposes depending on who was being carried.
As late as 1966, about half of the country’s ambulance services were run by funeral homes. Hearses were among the few vehicles that could carry a patient lying flat. In rural areas, funeral homes scanned radio frequencies for accident reports so they could dispatch before a competitor. The attendant sent was whoever was free and medical training wasn’t a requirement.
These rides were cheap — which is why, when Medicare classified ambulance transportation in 1965, it treated rides as a per-ride fee billed after the fact. At the time, that made sense.
Then everything about ambulances changed.
CPR arrived in 1960. Portable defibrillators in 1965. Paramedics emerged as a profession. A 1966 National Academy of Sciences report found that a soldier gravely wounded in Vietnam had a better chance of survival than a motorist seriously injured on an American street. Funeral homes fled the industry. Fire departments stepped in. Professional EMS systems were built — trained crews, expensive equipment, stations staffed around the clock.
The cost structure transformed entirely. However, the 1965 payment structure did not.
Ambulance services are not transportation businesses. They are readiness businesses. The cost of dispatching an ambulance on any given call is trivial. The cost of keeping it staffed, equipped, and available around the clock is enormous.
Medicare sets its own rates well below that cost. The average transport costs roughly $2,673 to provide. Medicare pays around $329. Billing Medicare patients for the balance is illegal. Medicaid pays even less.
The privately insured absorb the rest of the cost — i.e., every Medicare shortfall, every Medicaid gap, every idle hour of standby readiness. The result: 4.5 million Americans now live more than 25 minutes from the nearest ambulance station. Rural residents make up more than half of that population. The billing system that overcharges urban patients is simultaneously bankrupting rural services entirely.
When Congress passed the “No Surprises Act” in 2020 — banning surprise billing across most of emergency care — ground ambulances were the single explicit exception. Restricting ambulance billing, Congress concluded, would render much of the industry insolvent.
So the exception remains. People wave off ambulances at accident scenes. A 25-year-old with a broken toe calls a friend instead.
Victor Fuchs put it plainly in 1996: “Part of the problem is that we have not decided what we want our healthcare system to do.”
A system that had answered that question would have asked a simpler one first: who pays for the ambulance nobody called, but everyone needs standing by?
Until that question has an answer, the bill goes to whoever is unlucky enough to need the ride.
A Learning a Day 