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Why is healthcare the only thing we’re ok paying price unseen?
If you live in a major metropolitan area like New York or Los Angeles, you’d expect to pay more for many consumer goods. I found this out (in reverse) when I moved from New York City to a small town in Maine.
My $6.00 loaf of bread suddenly cost less than $3.00. The broccoli I love was now available at $2.00 per pound, not $5.00.
But I could go into these stores and know the price up front, before buying.
Recent surveys done by the Health Care Costs Institute (HCCI) have revealed that, for major medical procedures in cities across the country, you won’t know what you’re going to pay until it’s over.
What’s more, healthcare costs can vary wildly within a single metro area.
For example, they found that the range of prices for a C-section varied by $24,107 among the adjacent cities of San Francisco, Oakland, and Hayward, California.
Why are willing to accept these things when we won’t buy a loaf of bread — or a car — price unseen?
Supply and demand and what you’ll pay for healthcare
In Baltimore, a basic blood test known as a C-panel cost about the same as a good dinner out, $37. In Miami, the identical tests cost $725.
This kind of price fluctuation is unheard of in any other industry. So why is it allowed here?
Because your insurance company and the hospital are involved in high-stakes negotiations you never see, and they are concerned with their profits and losses, not with your price tag.
One factor at play is how many patients your insurance company sends to a particular hospital.
“One person buys one hamburger, and another buys 1,000,” says Sherry Glied, dean of the Wagner School of Public Service at New York University. “And it completely makes sense that the guy who buys 1,000 hamburgers gets a better price.”
Some hospitals have more negotiating power than others.
A hospital that many patients insist on using is able to demand higher prices from insurance companies. And the insurance company recoups its losses in the form of a higher price tag for us.
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As clear as mud
On January 1 of this year, hospitals began complying with a government requirement to publicly post the standard prices for all their healthcare services. In theory, this would offer us transparency and choices, and cause some healthy competition among providers.
These happy results remain just that, a theory.
Related: How to get the best healthcare from your health practitioner
The reality is that, while hospitals are complying with the letter of the law, they are not providing information that is of any help to us, the consumer.
Each hospital has a list of prices for the thousands of goods and services it provides, including medical procedures, lab tests, supplies, and medications. The sheer number is overwhelming.
For example, one hospital in Virginia lists more than 16,000 items on its “chargemaster,” as the list is called.
No two hospitals describe a procedure the same way, so it is virtually impossible for us to compare healthcare prices among hospitals.
And, the information is often presented on massive spreadsheets, and in language that is nothing more than gibberish to most of us.
For example, Vanderbilt University Hospital lists the price of a cardiology procedure known as “HC PTC CLOS PAT DUCT ART” at $42,569.
I don’t know about you, but I haven’t a clue what that is.
How to stay informed
Clear Health Costs is a network of journalism companies trying to bring transparency to healthcare costs.
CHC’s president Jeanne Pinder’s TED Talk explains their efforts and the information you can get on their site.
And, Credit.com offers a comprehensive page of advice and information, entitled, “How to Know a Medical Procedure’s Cost Before You Get It.”
Sources:
- They Want It to Be Secret: How a Common Blood Test Can Cost $11 or Almost $1,000 — The New York Times
- #HealthyBytes — Health Care Cost Institute Inc.
- https://www.nytimes.com/2019/01/13/us/politics/hospital-prices-online.html?module=inline — The New York Times
By Joyce Hollman
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