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Thread: Price transparency in health care

  1. #11
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    Re: Price transparency in health care

    So where does the above leave us if we really wanted this to work? Health services would need to be commoditized for competition in a consumer market. Perhaps that would require doing for health care services what the ACA did for health insurance products: create standardized, comprehensible packages that allow for easy, meaningful price comparisons. Given the huge variation in care delivery patterns, even within a single organization, and the long way still to go on precision medicine, it’s hard to say how possible this is even at a conceptual level.

    Once you get beyond the question of what providers are selling, you then probably need to simplify, rationalize, and standardize the pricing. Instead of prices and (even payment methodologies) varying payer-by-payer, you would probably need all-payer prices that reside with the provider. That would unravel the managed care paradigm under which the market currently operates. That could be good, until you remember that the majority of spending is on services that aren’t shoppable and thus aren’t going to be turned into commodities in a consumer-driven market. Which means that the only actors with the incentive and ability to hold down those prices are the payers—but what happens when those payers are defanged?

    If we could figure out how to package and price care for consumers, we’d still need to reshape the way people think about care. They’d need to take on primary responsibility for identifying the course of treatment they want to pursue and the provider they want to get it from. That is, they’d need to be willing to potentially give up longitudinal relationships with providers and disregard the referral relationships of the providers they do choose. The delegation of decision-making to providers would need to be significantly curtailed, if not ended, if we wanted to really turn health care into a market like most others. Is that feasible and desirable? I’m not sure that it is. At least not at the scale required here.

    The consumer-directed approach seems to me like it can work a little bit around the edges, and probably should be used where it can, but I don’t really view it as a realistic large-scale solution. It requires hugely revamping the structure and finances of the health care industry based on an assumption of consumer behavior that doesn’t really exist (and which, even if it did, probably couldn’t be applied to the majority of health spending anyway).

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    Re: Price transparency in health care

    Thanks for your thoughts on this.

    Where's the most obvious direction to go from here (e.g., legislatively)?

  3. #13
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    Re: Price transparency in health care

    It's easier to say why stuff doesn't work than to identify what will.

    I'm more-or-less where I've been for the past several years: robust exchanges/marketplaces are the best tool we've got going forward to retain any semblance of market dynamics in the health system. If people are voting with their feet and wallets and we've got ACA-era consumer protections forcing insurers to compete on price instead of creative risk-shifting/shedding, that downward pressure on premiums seeps into provider-insurer price negotiations, it adds urgency to the push for payment and delivery system reforms, and it incents insurers to get smarter about benefit design.

    We're always going to need some degree of paternalism in the health system. With their clinical and financial knowledge, insurers are in a position to build products that can enable and harness informed consumer choice and decision-making without facing the impracticalities of directly exposing consumers to the labyrinth of provider prices.

    And if in some markets we're going to have mega-provider-systems competing directly with each other and pricing access to their system with a premium (effectively usurping the insurer role), then they can bring that premium to the market by selling provider-sponsored plans in an exchange.

    I view the ACA exchanges as a pilot of the concept. The results have been promising but the entire endeavor has been hamstrung by unforced errors made by bad political actors. I also would've liked to see more employers using the on-ramps into the exchanges in the law. The rise of parallel private exchanges for employers also complicates things--I applaud the spirit but I don't like the dicing up of the market.

    Anyway, my immediate policy prescriptions would all be about shoring up the exchanges and making them more attractive to individuals and businesses (and thus, ultimately, to insurers as well). Frank Pallone's legislation is good, on net I like the current pending rule that would allow employers to fund HRAs for use in the individual market, and I'd like to see some creative efforts to nudge greater insurer participation.

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    Re: Price transparency in health care

    Quote Originally Posted by Neomalthusian View Post
    Thanks for your thoughts on this.

    Where's the most obvious direction to go from here (e.g., legislatively)?
    Pick up where the ACA left off and increase competition in the healthcare insurance market.

    Move away from employer provided plans.. and move toward individual purchased plans with minimum coverages

    Mandate everyone have insurance coverage.

    Offer a federal public plan through a separate entity like the FHA. One that does not have investors.. but is not at the whim of legislators that are influenced by the insurance industry.
    So we should put you down as supporting putting GPS trackers in everyone to "save lives"?
    Vegas Giants: "Sounds fantastic!"

  5. #15
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    Re: Price transparency in health care

    Quote Originally Posted by Neomalthusian View Post
    But on the way home I asked my wife to get onto the health system's website to find out the billable rate for the strep culture lab test, and found out it was either $280 or $560, depending on which was ordered.
    Another anecdote: I checked with insurance company and a billing manager at the the provider the cost for 2 Xrays under the plan. Result came back that provider would charge more than the allowed max of $150 copay and thus it would cost $150 * 2, or $300. Then I went and did the 2 Xrays. Final cost for both was $58 to me.

    And yet another anecdote:
    Date 1: went to pharmacy to get some drugs for a family member and the cost was unusually high. I declined getting the drugs. After various calls, figured out they are in the doughnut hole due to 1 expensive drug being filled on that date.
    Date 2: Called insurance company and they started a process to get an exception to not charge for the drug. Went back to pharmacy and got 10 OTHER drugs. Since the person was not in the doughnut hole now (since we refused the meds on Date 1), all came through with pre-doughnut-hole pricing as expected.
    Date 3: Insurance company process came through. Went to pharmacy and got the expensive drug (for free). Now the family member is in the doughnut hole (because insurance company paid a lot anyway).

    Two months later got a bill from insurance company for underpayment for those 10 OTHER drugs on Date 2 saying we should have paid for them as if the person was already in the doughnut hole. Explained to many supervisors that on Date 2 they were NOT in the hole, since Date 1 transaction did not count. They understood. Pushed the appeals. Two more months of back-and-forth resulted in them sticking to their decision despite the fact that on Date 2 the person clearly was NOT in the hole.

    Sometimes, it's almost impossible to find a price, even when you try. And even if you know the price, you may end up paying more anyway.

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