New Plans Clarify Healthcare Pricing Transparency – Finally
There is no greater opacity in health policy than price transparency. Insurance companies and hospitals tend to say that health care has no place because medical care is more complicated than cars and groceries.
Other skeptics say transparency rules are too hard to enforce. The hospital has largely ignored his two-year-old policy of the Trump administration that required prices to be posted online. Analyzing pricing information for adherents appears to be beyond the capabilities of most ordinary consumers. But the real problem is that consumers still have no incentive to take advantage of the opportunity to shop at the best possible price through price transparency. Policy makers can change this by making some changes to the standard health insurance design and encouraging consumers to share in the savings.
There is no denying that healthcare costs are spiraling out of control. From $3.8 trillion in 2019, total national healthcare spending in 2020 has exceeded $4.1 trillion. Prices for hospital services have increased by 200% over the last 20 years. Health care has become so expensive that four in 10 Americans tell Gallup they have given up some form of health care to save money.
Healthcare is expensive because prices are decoupled from market forces. Insurance companies negotiate with providers to determine how much they will pay for a particular service. Patients can cover the first few thousand dollars of medical expenses through deductibles. But without access to transparent pricing, it’s difficult to buy for comparison. It may also be restricted to certain networks of participating providers, even if those providers are not the cheapest or highest quality.
Jonathan Wolfson and Josh Archambault of the Cicero Institute propose to address this with a model method called the patient savings method. In the plan he has three steps.
First, hospitals should publish cash prices for their services, not cryptic codes or what insurance companies will pay. This allows patients to actually compare prices and buy the one that best suits their needs like they would in any other market. It can also encourage hospitals with lower prices or above average quality to advertise their competitive advantages. This may encourage competitors to lower their prices or improve their own quality.
Second, the plan requires insurance companies to calculate against patient deductibles when payments to out-of-network providers are lower than the lowest in-network rates. This provision encourages patients to look beyond her network of providers for the highest quality care.
Finally, the plan directs insurance companies to share the savings earned after the patient reaches the deductible. Under this clause of the plan, the patient retains half of the difference between the cash price of care and the lowest rate in the network. The insurance company keeps the other half. This is a win-win situation for patients and insurance companies.
Such a plan has many subsequent advantages. As competition drives up prices for health care providers, insurers can lower their own prices, making insurance coverage more affordable. Small businesses may be able to offer their employees more generous plans without increasing premiums.
In addition, herds of patients seeking care could lead to more efficient allocation of medical resources, as providers and consumers weigh their preferences on price, quality, and convenience. Ideas like this could reinvigorate the debate on free-market health care reform. Days after the 2022 midterm elections, Axios announced that Republicans were “ready to take power without health problems.”
A plan to finally achieve price transparency and articulate the value of market competition deserves serious consideration by Republicans. It could also debunk progressive claims that more government, or even Medicare for All, is the only way to improve America’s healthcare system.
By promoting competition, price transparency has resulted in higher quality, lower prices and better value in nearly every sector of our economy.Healthcare has been an exception for decades. was. This is largely due to government policies that hinder price transparency. Ideas such as patient savings laws could bring much-needed spending to healthcare, potentially benefitting patients, insurers and providers alike.
