Getting the power of the marketplace to have some effect on health care costs has been the holy grail for years. The Trump administration just announced a major move. Let’s look at it.
In an announcement Friday, while many were watching impeachment hearings, Trump officials described new rules they hope will improve transparency in health costs.
One rule will require health insurance plans to provide “cost-sharing information, including an estimate of their cost-sharing liability for all covered healthcare items and services, through an online tool” (HHS.gov).
Further, insurers will be required to: “Disclose on a public website their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers.”
Have you fallen asleep? I hope not because we haven’t come to the good part yet.
The proposed rule will also require hospitals “to provide patients with clear, accessible information about their "standard charges" for the items and services they provide” (HHS.gov).
So, insurance companies will let us know how much they expect we will have to pay should we have to file a claim, and also how much they will be paying the hospitals and doctors. And hospitals will broadcast their charges. This is a big deal.
Or is it? It’s been done in some states already. The longest running experiment on this is in New Hampshire where they established a cost comparison website in 2007. Over a five-year study period MRI costs decreased 1-2%. The overall savings for all outpatient radiology costs for people who used the tool was 3%. Not really big apples, I’ll agree. Especially if you realize imaging costs in the US are about twice what they are in other developed countries.
But this modest success hasn’t stopped other states from launching their own website comparison tools. Our neighbors Washington and Oregon have theirs running, as well as half a dozen others. Maybe the states that have chosen to experiment can find better solutions. I really don’t see Idaho investing in this soon.
Why hasn’t the all-powerful marketplace had more of an effect ratcheting down the cost of healthcare? Before we look in the mirror, let’s see who else we can blame.
If you ask Bernie Sanders or any other Democratic presidential candidate that raised their hand, the blame would go squarely on the health insurance industry and the profit driven Medical Industrial Complex.
“Let’s eliminate all that” to quote Kamala Harris. Maybe that gets your base fired up, but it skips over the fact that every developed country with universal coverage has some form of private insurance. Israel and the Netherlands require insurance be purchased. Many countries require private insurance to supplement public health insurance. Others make it optional. None outlaw it.
How about we blame the lawyers? Sorry, it is a cost, but a small one. Medical malpractice may be a boogey man for nervous doctors and an easy target for politicians, but it represents less than 3% of all health care costs, even if you factor in defensive medicine. And defensive medicine costs 4X what the actual premiums and settlements run.
Should we blame the defensive doctors, or at least the highly paid ones?
It is true, doctors in the United States are paid more than doctors around the world. In fact, it’s about twice as much. And we have an abundance of specialists here in the US who tend to be higher earners. But doctors’ income comprises a little less than 10% of the national total health care costs. Cutting their pay in half would save us some. I’d rather focus on getting better results out of them, er, I mean us, since once again medical mistakes have been found to be the third leading cause of death according to a Johns Hopkins study.
The US Medical Industrial Complex is huge and to quote our President “complicated”. We are going to have to do a lot of things to turn this ship around. Every little bit will help. Transparency will help. Who knows what we might see.