The Government Accountability Office recently cited the barriers faced by consumers in getting cost information. For example, insurance companies refused to share rates negotiated with health-care companies, calling the information proprietary.
One of the key principles behind high-deductible health plans (HDHPs) is to create more discerning health-care consumers. In theory, health-care providers will compete for customers on price and quality, lowering the former and increasing the latter. However, the existing tools to do this are primitive and mostly useless.
For example, California requires hospitals to publish their official prices, known as charge masters. However, these have little value because hospitals charge any of dozens of prices for the same procedure, depending on negotiations with different health plans. UCLA Medical Center included this unexplained entry on its published charge master: GRMS EXT PIECE HOWMED STRYKER. Price $10,290. That, by the way, is a prosthetic bone.
Contrast this with other consumer goods, for which prices are clearly marked and easily compared. Product details are listed and readily available. Expert and consumer reviews usually exist. These tools do not exist in health care.
More than 30 states are considering or attempting to pass legislation to increase price transparency. Three bills were introduced in Congress in 2010 to do the same.
There has been little urgency to help HDHP enrollees up to this point. They remain a small, if growing, segment of the insured population. Most patients are fully insured and pay a small portion of their health-care costs.
Patients shopping based on price are at a disadvantage because they do not know what they need. Every disease or condition needs a different mix of care. Attempting to figure that out without a physician’s guidance can be a foolhardy exercise. Consumers have a much easier time with simple procedures such as those offered in retail health clinics, or for prescription prices.
And, of course, few feel like shopping when they are ill.
Patients also have a difficult time trying to determine quality of care. This is an example of how efforts to provide the consumer with more detailed information may backfire. Many erroneously believe higher cost of care means higher quality. That line of thinking might encourage providers to raise their prices simply to enhance the perceived value of their services.
Consumers do not even shop around for health services not customarily covered by insurance, such as LASIK surgery and dental crowns. These services are ideal for comparison shopping: they are not urgent; there is no need for further diagnosis; there is usually one price per provider, and the out-of-pocket cost can be steep.