Could someone explain to me why health costs are not transparent in this country when public payers are picking up nearly half the tab?
I just read a nice little booklet called “Why Health Care Costs So Much” and it jogged me to ask the transparency question again. The authors, Greg Dattilo and Dave Racer, excoriate “gotcha” prices in health care and ask patients/consumers to ask for the Medicare price when they are about to undergo a procedure.
My label for the “gotcha” prices has been “sticker prices.” You could call them retail prices. They come in at about three times the Medicare prices, which, in turn, are supposed to be a little above hospital, clinic or doctor costs. You could call Medicare prices the wholesale prices.
The only people who pay the 300% sticker prices are the uninsured. People with insurance get discounts. Dattilo and Racer put insurance company prices at 125% to 150% of Medicare prices.
The federal government has what amounts to price controls, so it can make its low, cost-plus reimbursements stick. One response to such price controls is withdrawal of services. And that is happening with some doctors and clinics that refuse to take on more government-pay patients. Another response is for providers to shift bigger price increases to non-government payers.
The willingness of most providers to take most Medicare and Medicaid payments suggests, though, that the government prices aren’t way off the mark. The feds appear to know more about real costs and real prices than the health care corporations, who generally aren’t good at cost accounting.
So, why doesn’t the federal government just publish Medicare prices? It could be done region by region. Instantly, we would have a nationwide transparency system. The same can be said for prices paid to cover federal employees. Just make those prices public. President Obama could probably do it by executive order, a method he favors.
The need for a national menu of health prices arises because there still is no marketplace for health care. Markets discipline prices. But such a market is just emerging as payers and consumers get smarter about what they are buying.
Wisconsin Gov. Scott Walker recently called for more transparency in health costs/prices. So, why doesn’t he issue an executive order to publish prices paid to cover state employees across the state? He could do the same for the Medicaid prices the state is paying.
It would be interesting to see if Wisconsin, with about 200,000 lives covered, buys better than Medicare.
The prices listed on web sites by insurance companies and providers get less clunky each year, but most still are not good enough.
Remember this about the price data. It belongs to the guys writing the checks as much as it does to insurers and providers.
Ergo, self-insured private payers are demanding the data on not only discounted prices – real prices, not sticker prices – but also on quality.
Bill Bohn, CEO of Associated Financial Group, a large broker/consultant on benefits, wants CMS, the agency managing Medicare and Medicaid, to do a lot more. He wants them to collect critical data, such as volumes of procedures by provider, success rates and actual costs. He would tie reimbursements to compliance and performance on those metrics.
I would want such data to be made public.
Entrepreneurs are jumping into the market niche for transparency, but often meet resistance from insurance companies who see claims data and their discount schedules as their intellectual property.
Nonetheless, citizens, the taxpayers, the real payers behind government-run health plans, have a right to Medicare, Medicaid and public employee prices and quality outcomes. It’s their data,too.
You’d think such openness would be required under the Freedom of Information Act.
