Healthcare industry fights revealing prices for services
April 17, 2017
Turning healthcare consumers into educated shoppers has long been a goal of employers who foot the bill for most care, politicians and some consumer organizations that believe that someday shopping for care should be as easy as comparing brands of canned soup.
All it takes are some clear disclosures of prices, ingredients and whatever else seems comparable in a product or service coupled with a bit of education in how to make the shopping trip fruitful, and the healthcare system will transform itself like magic. It will become competitive, prices for services and therefore insurance premiums will drop, and more Americans will be able to afford care.
I've heard this talk for 25 years, but the healthcare market has yet to become a shopper's nirvana. Healthcare is not like canned soup or cheese. It's complicated — plus there are all kinds of secret and behind-the-scenes deals made by different actors in the price drama that make it nearly impossible to understand what's being charged.
The actors don't want anyone to find out.
To take one example: At the end of last year, the New York State Health Foundation studied 107 hospitals in the state and found those with the greatest market share usually charged higher prices. Those facilities could demand such prices from insurers, especially if an insurer wanted the hospital in its network — or if the hospital was the only game in town.
The foundation also found gag clauses written into contracts between hospitals and insurers that prevented insurers from posting hospital prices on their websites. Some clauses say that either a hospital or an insurer can pull out of a contract if one party engages in practices that hurt the other. In other words, if an insurer tries to steer patients to lower-priced providers, the hospital could cancel its deal with the insurance carrier.
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The deck is stacked against the patients, who can't find out anything meaningful about pricing even if they wanted to.
An ongoing political battle in Ohio pitting Jim Butler, a member of the Ohio House of Representatives, against the Ohio Hospital Association and other healthcare professional associations also turns the idea of shopping for healthcare prices on its head.
You see, Butler introduced legislation in 2015 requiring Ohio hospitals and other medical providers to post their prices for non-emergency services. After some legislative wrangling, the law passed as part of the budget for a state agency, and Gov. John Kasich signed it into law.
According to the Health Care Cost Institute that looked at insurance claims for four large carriers, prices vary widely in Ohio. For example, a pregnancy ultrasound in Cleveland costs three times more than the same procedure in Canton 60 miles away.
The same year Butler's law passed, Gov. Kasich told reporters at a press conference nobody knows what medical procedures cost, and making those costs transparent so patients can shop for quality is key. The governor seemed to be on board.
But he wasn't. Since then, the governor and the Ohio Hospital Association have been trying to make sure price posting never happens. "The hospital association is fighting the hardest to avoid this, and their strategy is to divert the effort," Butler told me.
The Kasich administration has yet to issue rules to implement the price posting law, and Butler says the Kasich administration has continued to say it would not enforce the law, which was to become effective last Jan 1. But at the end of December, the hospital association and other providers sued to prevent the law from taking effect. The next hearing is scheduled in August. The suit seems to be a stalling tactic until the governor's proposed state budget passes at the end of June. It includes a provision for repealing the law.
Butler says he has met with the industry several times, but the hospitals want to water down the law to the point it's not helpful to patients. For example, a revised law might require disclosures for only a handful of services and then only if patients request them.
Butler zoomed in on an important fallacy in the theory of shopping for medical services. Recently he tweeted, "How can healthcare savings accounts and high deductible health plans work if patients are not given prices beforehand?"
Recall that health savings accounts and high deductibles are politicians' preferred choice for bringing down costs. According to this theory, if patients must pay more out-of-pocket, they'll use fewer services, and national healthcare spending will drop.
Stronger medicine is needed if the U.S. is to slow down the ever-rising cost of care. But if there's such hostility to simple price disclosure from the medical establishment that would rather keep patients in the dark, will more stringent remedies for controlling costs ever work?
What's been your experience obtaining prices for medical care? Write to Trudy at email@example.com.