Healthcare cost stethoscope bill

Earlier this month, we looked into the topic of healthcare pricing transparency, and discussed why its relevant.

Today we dive into how pricing transparency affects our healthcare decisions and costs.

The average consumer, consciously or subconsciously, price shops on a daily basis — checking out which gas station has the cheapest price per gallon, which grocery store has the most affordable produce, and which Amazon wholesaler has the cheapest gadget.

But when it comes to our healthcare, that’s an entirely different ballgame.

The unfortunate truth is that consumers in the United States do not necessarily know the cost that they pay for healthcare because those financial implications by insurers and providers have historically been kept under wraps.

Consumers are starting to wonder about the price of their healthcare, realizing that a higher price tag does not necessarily equal better treatment. However on the other hand, many people do not understand that there is a wide range of healthcare prices — some providers who are offering the exact same service will charge dramatically more.

Like gasoline and groceries, if patients had the opportunity to price shop their healthcare, there’s a good chance (assuming the quality of service is apples to apples) that they would go see Dr. Smith for their colonoscopy 10 miles away vs. Dr. Thompson down the street who charges twice as much.

Case in point — New Hampshire providers’ mammogram prices vary greatly among various hospitals in the state. Elliot Hospital charges upward of $300, whereas Concord Hospital can charge upward of $900. Patients at the exact same hospital could even pay different prices depending on their coverage.

The Legacy of Pricing Transparency

After the U.S. government passed the Patient Protection and Affordable Care Act (ACA) in 2010, millions of previously uninsured people suddenly became consumers in the health insurance market. Many of these consumers bought basic healthcare plans, which means that their new insurance would cover most but not all of their healthcare expenses. With a plan in place,  patients could pay anywhere between $458 or $56,000 for an appendectomy, as explained by The Robert Wood Johnson Foundation.

“This enormous price disparity for insured people under the ACA has sparked recent conversations about the importance of price transparency as a cost containment mechanism, as well as a valuable source of consumer information.”

Rates vary depending on where the service is provided, what kind of insurance the patient has, and other factors. It’s challenging for patients to understand the amount they will pay for a medical service. Many people are calling for greater price transparency in healthcare, where patients can clearly see the price of a treatment and determine how much they will pay out-of-pocket before receiving care.

The average premium in America has increased by 69 percent over the last 10 years, according to the Kaiser Family Foundation. With premiums increasing, families are incentivized to make more educated purchasing decisions when it comes to their healthcare. Saving money is important now more than ever before, particularly for families with high deductibles.

Considerations for Consumers

Are there hurdles in moving forward with more transparency in healthcare pricing? Absolutely. A likely barrier is convincing insurers and hospitals to hand over their pricing information. The US healthcare system is a private marketplace and the prices that insurers negotiate with providers are treated as proprietary. Additionally, patients understandably don’t always know exactly what treatments they’ll need before they visit a doctor; this makes it tough to know how much it will cost to go to each provider, much less compare costs among the options.

Another concern is if healthcare providers lower prices to remain competitive in this new transparent arena, there may be temptation to lower quality. Deception among providers is a possible unintended consequence.

Despite these concerns, simply put, the benefits of exposing pricing for consumers far outweighs the potential negative implications. There is too much at stake, financially and medically, to continue allowing patients to be in the dark when it comes to healthcare shopping.

The Healthcare Financial Management Association (HFMA) developed a guide to help consumers understand where to get answers to their questions about healthcare prices, compare prices among providers, and manage their out-of-pocket costs. It can be downloaded here at no cost.

Where We Go From Here

States can play an essential role to boost price transparency. In the future, states should give consumers permission to valuable price and quality information.

A stronger force from local governments and advocacy groups for greater price transparency has been a catalyst to initiating online databases and passing legislation that calls for more disclosure from providers.

To tackle the rampant discrepancies in prices, policymakers, payers, and consumers require more transparent understanding about the price and quality of the care they receive. Consumers need facts to prepare for out-of-pocket medical expenses. Additionally, insurance benefits should be offered that incentivize consumers to select high-value providers — but this can only happen if consumers have the necessary information that motivates them to do their homework on providers to assess price and quality.

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