Price transparency reform

The following is an idea I’ve been exploring for price transparency in managed health care. My idea can be summed up as three principles:

1. All healthcare providers must provide a list of cash prices for their services.
2. Providers of a certain minimum size must maintain a publicly-accessible website with their current prices; smaller providers must provide an updated list every three months to nonprofit and government organizations who will provide these (possibly slightly out-of-date) lists to the public on their websites.
3. All providers must disclose any discounts given to insurance companies for the same services, e.g. if Aetna pays $100 less than the cash price for a physical exam, then the reduced price must be disclosed to the public (though it is not necessary to name the specific companies that receive the discount).

Reform means nothing without the ability to control costs. Public disclosure of costs will allow people with “high deductible” insurance to shop around, even in other states, for the best providers of routine care.

Kuma needs a root canal

My Australian Shepherd Dog Kuma is three years old. Apparently he cracked a tooth a few years back, and now he needs a root canal or a tooth extraction. The difference in cost between the root canal, performed by one of the top specialists in the world, and the tooth extraction, performed by a skilled general veterinary surgeon, is about $2000. Yes, we’re talking about $2000 to save one dog tooth!

The world of canine health care provides a stark contrast to human health care in the United States. In that world, it is easy to get a price quote for proposed services, and it’s easy to shop around based on price. Top specialists can charge a premium if their services are in demand. Pet health insurance is available, but most people don’t have it. Since most people pay cash, providers are ready and willing to quote a cash price, and there is competition between providers based on both quality and price. Note that I do understand that dental care and medical care are paid for separately for people, and that dental care professionals deal with cash customers on a regular basis. The same cannot be said for doctors in “managed health care”.

How much does your doctor charge for a physical exam? Is it the same price for someone with Aetna as for someone with BlueCross? How about if you want to pay cash? Apparently it can be hard to find out how much services cost within the managed health care system, mostly because people with health insurance don’t seem to care. The following segment by John Stossel argues this point:

Whether or not one favors universal healthcare, most would probably agree that prices should be transparent to consumers, and that it is totally unfair to bill the unisured, cash-paying consumer several times what the insurance companies pay for the same service.