It’s no secret that healthcare costs are rising in this country. The answer that is eluding the general public, and experts alike, is the best way to slow these cost increases. As experts continue to debate over the success of various methods of controlling costs, one topic, pricing transparency, is gaining more momentum.
The following aspects of healthcare pricing have been under scrutiny for years:
- The pricing standards of healthcare providers are typically held in secret
- Pricing varies widely by location, especially when comparing large cities
- Insurance companies negotiate different pricing contracts with various hospitals, causing a significant variance in pricing.
But is pricing transparency the answer to slow healthcare costs? Let’s take a look…
Doesn’t PPACA’s Provisions Push Price Transparency?
The Affordable Care Act is changing the landscape of healthcare drastically. However, according to Steve Teske of BNA, the Affordable Care Act doesn’t specifically address pricing transparency. Instead, its provisions, such as the “Cadillac tax”, are driving factors toward industry-wide pricing transparency in the future. Bills to mandate price transparency have run through state legislature, but they have been met with mixed results.
Well, How Much Is It Worth To You?
As with most consumer goods and services, prices tend to be higher in areas of higher populations. But recent studies have shown that even among large cities, there can be a huge difference in pricing. For example, according to Dan Munro of Forbes, a colonoscopy in New York City can be almost five times as much as other major U.S. cities. Although these numbers follow the basic economic laws of supply and demand, price transparency may be a key to making healthcare more affordable in these highly inflated areas.
Contracts between hospitals and insurance companies also account for pricing variations in the healthcare industry. If hospitals are required to become completely transparent with their pricing, hospitals may have to create more parity in their pricing across the board to hold back public scrutiny.
Shouldn’t Costs Be Headed “Downhill?”
If consumers are given the tools to make educated choices concerning their healthcare, people will use healthcare more effectively, and costs will go down.
Sounds good, right? In theory, yes. When put into practice, maybe.
Pricing transparency, as well as the emergence of consumer driven health plans, gives consumers a chance to take more control of their health care. However, if consumers do not use the tools they are given, minimal progress will be made toward controlling health care costs.
Also, in contrary to public belief, not all hospitals are profitable. According to Dan Munro, about one-fourth of all hospitals in the U.S. operate at a loss. Wow! He also goes on to state that this number may even increase as prices drop with the changing landscape of healthcare (Medicaid expansion, establishment of the insurance marketplace, etc.).
Essentially, if costs are headed “downhill”, some hospitals will thrive, but watch out for mergers and acquisitions to increase quality and efficiency.
What’s The Risk?
Pricing transparency has the potential to be great for consumers in the future, as hospitals will be held more accountable for the prices they charge their patients. However, this relies on the consumer to make sure they use the tools at hand to lower their healthcare costs.
What can you do to help lower overall healthcare costs?
- Know and understand your health insurance policy. Understand how your deductibles, co-insurance, and co-pays contribute to the cost of your healthcare.
- Ask questions and do research when options are available. Pricing variations do exist within the healthcare industry, so make sure you are using all the tools available to make sure you get high-quality, low-cost care.
- Talk to your doctor about the true cost of your healthcare. With the changing nature of the industry, don’t be afraid to start a conversation with your doctors to help understand the best treatment options without compromising your health.
Want to learn more? Check out these articles:
Why Pricing Transparency Wont Affect Hospital Pricing
Federal Government, States Could Foster Health Care Pricing Transparency
If you are still looking for more information on Health Care Reform, you can contact us. We are always happy to help.
