How Do We Know If the Price is Right (If We Can’t Find Out What the Price Is)?

19 Aug How Do We Know If the Price is Right (If We Can’t Find Out What the Price Is)?

By Jessie Gruman

“Health care costs are sky-rocketing!” “The percentage of the U.S. GDP devoted to heath care costs is the highest in the world.” “The cost of Medicare is unsustainable.”

For most of us, the cost of health care (i.e., the dollars required by the system to produce and deliver care) isn’t what brings us the most anxiety.

It’s when we’re patients or helping a loved one find care that so many of us are deeply concerned about theprice of our health care: what we – personally, individually  pay to acquire the services, drugs and devices we need.

We hear news stories about people who delay needed care, split pills and skip treatments because they just can’t afford them.  We hear that more of us are going to a retail clinic in a Walmart to check out a bad cough because of convenience and lower prices. We watch family members and neighbors slip into bankruptcy because they can’t pay the medical bills from their car accident or their cancer treatment. We see jars of pennies at the corner 7-11 with a sick child’s face and a plea for help with unpaid hospital care.

These experiences hit home even among the well-insured as we watch our health insurance premiums make their annual leap along with our co-pays and as many of us find ourselves unceremoniously switched by our employers to high deductible insurance plans.  Or we find ourselves staring the price of care in the face when we are between jobs or our company quits offering insurance because it’s just too expensive.

There is no doubt that more of us are becoming price-sensitive about our health care. An interesting online survey from Altarum indicates that we have considerable interest in unit pricing and comparison shopping for health care services and products.

You would think that, in response to this surge in interest, hospitals, diagnostic lab companies and clinicians would make it easy for us to find out what we will have to pay for a given procedure or service.

But you would be wrong.  I think this is still true today, a year after a GAO reportdocumented the sorry state of price transparency for the U.S. public. But I don’t know for sure.  And neither do you.

From my own experience and the reports I have read and heard, finding out the price of a colonoscopy or an annual check-up with my kid’s pediatrician or the insertion of a cardiac stent still ranges from moderately simple to simply impossible.

I think it would be great if we could get an assessment of the availability of price information in different markets for different health conditions and for different insurance constellations.  The review should be conducted annually and widely disseminated.  There are a lot of us who really need to know about the actual price of our health care.

Who?

Well, of course, we the public have the most to gain – and lose – from not having good price information, even in the absence of meaningful quality information. These days we are exhorted by the media and our employers to act like consumers and “shop” for our health care even when critical information is rarely available.

Knowing that we probably can’t find the information we need or that it is tough to ferret out will a) annoy us so sufficiently that we slam the phone down and take to the blogosphere with our frustration; b) resign ourselves to making potentially huge financial decisions in the dark; or c) spark us to take collective action.  Got a hunch about which you’ll do?

Employers should know about the state of prices too. If, indeed, they are committed to us workers being engaged in our health care, such engagement should extend beyond losing weight and not smoking and encompass making informed choices about the health care services and products we purchase.  Employers can exert pressure on institutions and corporations with a force that individuals (so far, at least) cannot.

Hospitals, clinics, practices, and diagnostic and treatment centers also need to know where they stack up.  If health care is to work efficiently, price transparency for the public is a necessary component of market competition, even when most of us have some kind of insurance coverage.

Whether we think of ourselves as consumers or not, or believe that health care will ever operate as a real marketplace or not – these lofty considerations are immaterial to our immediate need to find out the price of having the tumor removed from our leg, my pack-a-day smoking brother to get a CT scan of his lungs or the antibiotics our friend’s sick baby needs to sleep through the night.

Being able to find out the price of health care services has to move from a rhetorical nicety to a realistic expectation. It’s not likely that any nascent regulation, policy or organizational change in health care will blow away the fog that obscures this information from the public.

But repeated systematic assessment that illuminates the size and scope of the challenge individuals face in finding out this basic information would remove important barriers to our effective engagement in our health care.

________________________________________________________________________________________

Jessie Gruman is President and Founder of the Center for Advancing Health (CFAH). She writes regularly on CFAH’s Prepared Patient blog, where this piece was originally published. She also tweets daily at @jessiegruman.

2 Comments
  • Katie Vahle
    Posted at 17:10h, 19 August

    Jessie – thanks for sharing your perspective on price transparency. I do hope the frustration around consuming healthcare in the dark will inspire collective action rather than burying our heads in the sand. We created a patient advocacy tool to aggregate consumers experiences so we essentially reverse engineer prices while also collectively uncovering billing mistakes or potentially fraudulent behavior across providers and health plans. I agree we’ll need a people-powered movement to make a dent in these unfortunate market dynamics. Katie from CoPatient

  • Mark Cancellieri
    Posted at 17:10h, 02 September

    I think the lack of price transparency is mainly driven by the fact that patients overall have little incentive to shop around. Only about 10% of health care expenditures are out-of-pocket. In other words, about 90% of health care expenditures are paid by someone else (e.g. insurance companies, government, etc.). This means that patients have little concern about the cost of care.

    For example, I pay $30 to get a check-up from my doctor. What is the full cost of the visit? I have no idea because I don’t care. The $30 copay is all that is relevant to me. I’m not going to bother to search for a more affordable place to get a check-up because I’m not likely to find anything that costs less than $30, and if I did, it certainly wouldn’t be so far below $30 to make it worthwhile to search. I also pay $15 for my prescriptions. How much do they cost? Once again, I don’t know and I don’t care, so I’m not going to bother to search for cheap prescriptions.

    Because there is little incentive for patients to find the best price, there is also little incentive for health care providers to compete on price, and therefore little incentive for health care providers to be transparent about their pricing.

    Unfortunately, our lack of incentive to be diligent about keeping the cost of care low increases the health care claims that health insurance companies must pay out, causing health insurance premiums to skyrocket.

    The solution is clear (although politically impossible). We need to reduce third-party payments dramatically by turning insurance back into its appropriate function — providing catastrophic coverage, and not covering about 90 cents of every dollar spent on health care. That would require eliminating health insurance mandates, eliminating the employer-provided health insurance exemption, and radically reducing government expenditures on health care at a minimum. At this point, it might also require a tax deduction for out-of-pocket health care expenses, but *no* deduction for health insurance premiums in order to provide even more of an incentive for health insurance to switch to catastrophic coverage only. Expanded use of HSAs to save up for out-of-pocket expenditures will also be very helpful.