WHY AMERICA NEEDS PRICE TRANSPARENCY NOW MORE THAN EVER

If it is a function of the amount of money a country spends on its healthcare, then the United States of America should have the best healthcare sector in the whole world. But you and I know that is as far away from the case as possible. Like as far away as anything you can imagine.

The United States spends almost 18 percent of its GDP on healthcare, corresponding to over $10500 per person. For context, the UK spends below $4000 per person. There are many ways to look at this, and in every single one of them, it’s ridiculous. Seriously, I’m sure no one would bat an eye if the massive amount of money spent on healthcare actually correlated to a better healthcare system. Like a system where insurance companies don’t exploit people, where primary healthcare isn’t crazily overpriced, a system where the average American can confidently say they are getting their money’s worth of healthcare services, I can go on and on.

One question you may be dying to know is why exactly the United spends so much on healthcare, and there’s no one answer to that question. It is generally through the combined effects of high service prices, higher administrative fees, and high utilization of these services.

Then comes the next question, how can the United States reduce the total amount of money it spends. And again, there is no one answer to this question. In fact, there is no one answer that you can find seven out of ten people agreeing to. But a step in the right direction is price transparency.

So, what is price transparency then? Allow me to state it out in the simplest possible way – a system where a consumer knows what a particular service is going to cost before paying for it. It’s that simple. You can look at it as a system where all about the pricing of healthcare is going to be known by the people that are paying for healthcare.

This system will require hospitals and insurance companies to offer full disclosure of all that goes into the financial aspect of any healthcare service. This will mean consumers can eventually get to know exactly what it is they are paying for. Price transparency can serve to increase both

the productivity of healthcare workers and the quality of health care too. Let’s be honest; it sounds nice. Very nice.

What then is the problem? Well, take a wild guess. You just guess the group of people that have a problem with this setting. Go on. I’ll wait.

Of course, it’s the hospitals and insurance companies. They are the ones kicking out against price transparency, and why they are doing this is not hard to see. It is because this current system benefits them. This current system where healthcare is overpriced, this current system where they can be shrouded in secrecy when exploiting consumers, this current system where there is little to no competitive pricing in the healthcare sector. So, of course, they kick out against it.

Under a price transparency system, insurance companies will have to disclose the rates they negotiate with hospitals, medical groups, and other independent providers, and they don’t want that. Why is that exactly? Why don’t they want a system that will benefit the people they claim they are insuring? Because that system will mean less money to their pockets. It is estimated that insurance companies charge over 40 percent of the prices that should actually be paid for a healthcare service. 40%.

It gets worse. In 2016, according to a survey of 40 hospitals by the Pioneer Institute, it was found that the price of an MRI of the knee without contrast varied across different hospitals. It stood at $400 at Huntington Hospital in Los Angeles and a ridiculous $4544 at Montefiore Medical Center in New York City. Just look at that. That is the state of the healthcare sector in America.

If the prices of healthcare services are available beforehand, then it will offer some form of competitive pricing system because people tend to shop for cheaper options. The quality of healthcare does not always correspond to higher prices. This competition is much needed in the healthcare sector that is slowly transforming into a monopolistic system in many areas.

It can also help to reduce operating costs. If workers in a hospital are fully aware of the costs involved in managing their various departments, they can make smarter financial decisions. See it this way. It will be easier for an operating room workforce to lower the costs of maintaining an

operating room when they know what individual resources in the operating room cost, as compared to when they have no idea of the cost of individual resources.

It is truly saddening that the healthcare sector of the United States has drifted away from producing quality healthcare to just making money. Many providers don’t run their hospitals like hospitals; they run them like business ventures. And what at what cost? The health of Americans.

Am I disappointed? Yes, very much. Am I surprised? Not in the slightest. It is what the state of the healthcare sector has fallen to in the United States. Many times, we keep asking ourselves why our healthcare sector isn’t getting better, why prices just seem to always be on the rise, and the answer is usually right in front of us. The people that are concerned with administering this healthcare see it as a money-making scheme.

Well, there is some good news, at least. The Trump Administration is seeking to pass out a Price Transparency Act that will be effective from January 2021. Then there’s more bad news. Not long after news of this Act broke out, major hospitals and insurance companies threatened litigation. This implies that it may be several years before this Act becomes relevant, that is if it becomes relevant at all.

You know, the more I think of it, the more angered I become. Isn’t it only right for patients to know the full prices of the services they are paying for? Many people say that price transparency may, in fact, lead to increased prices, but that is just baseless. There is not one sector in the United States that has higher prices because they release pricing information. Not one. So, what then is the debate about?

We are all aware of the economic impact of the Corona Virus. Many people have lost their source of income; many businesses have and are still tanking; the government is also affected by the pandemic economy-wise, and these are just the most notable ones. What the healthcare sector will look like post-pandemic if high prices of healthcare persist is scary. And this is precisely why we need the price transparency system now more than ever. I only hope insurance companies and hospitals see it this way too. I am not banking on it, though.

References

  1. https://www.milforddailynews.com/news/20200813/column-best-way-to-fix-american-he alth-care-system?template=ampart
  2. https://www.google.com/amp/s/healthpayerintelligence.com/news/amp/what-the-healthca re-price-transparency-order-means-for-payers
  3. https://khn.org/news/white-house-unveils-finalized-health-care-price-transparency-rule/
  4. https://healthadministrationdegree.usc.edu/blog/the-challenges-and-rewards-of-transparency-in-healthcare/
  5. https://hbr.org/amp/2019/07/price-transparency-in-health-care-is-coming-to-the-u-s-but-will-it-matter

  1 comment for “WHY AMERICA NEEDS PRICE TRANSPARENCY NOW MORE THAN EVER

  1. Kurt
    September 2, 2020 at 10:22 pm

    One little problem here. You can rant and rave about price transparency but until patients are held accountable to their lousy health behaviors, then nothing is going to change in this country. What is one supposed to do? Get on an airplane and go to Los Angeles to get the MRI of their knee?
    The major problem is most patients don’t give two sheets to the breeze and will not change eating or drinking habits to lose weight or are able to do more exercise. I rest my case. Woe unto thee that go into primary care. Though one might have a bit less stress going into DPC, if they choose the wrong geographic area with too many people used to sucking off the government teat, they will go bankrupt. Period.

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