Healthcare costs in the US
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Written by Judith Riess, MTM editor-in-chief
Healthcare costs in the U.S. continueto rise yearly and by the end of 2019 are projected to be as high as 20 percentof the GDP. We all know this is not sustainable. As consumers we shop to getthe best price on groceries, cars, sporting equipment, you name it, but inhealthcare we do not have the means to get the best price.
When it comes to healthcare we have noidea what it costs. We know what we have to pay each month not paid by ouremployers or as private individuals and we know what we have to pay to ourinsurance companies each month. But overall, you can’t go online and comparehospital costs for procedures from one hospital to the next and you can’tcompare insurance costs from one carrier to the next. We would not go to a cardealership to purchase a new vehicle without having compared prices online andwith several different dealers. That is, however, not available to us ashealthcare consumers.
We have no idea why a patient in NewYork pays one price for a procedure but a patient in Florida has the sameprocedure and pays a totally different price. Why is it that we can go toWalmart and pay $4.99 for a bottle of 100 aspirin, and when dispensed by thehospital it costs as much as $30 for a single aspirin?
A recent study conducted by the Rand Corporation on hospital pricing made it absolutely clear that the most basic information on healthcare prices is lacking. A very creditable team of analysts worked diligently to gather data from self-insured employers, employers who are trying to understand the rising healthcare costs and the patterns and trends that determine hospital costs and policy makers and researchers who are concerned with the lack of transparency in healthcare.
These are the key findings of thereport:
- Relative prices including all hospitals andstates (25) in the analysis rose from 236 percent of Medicare rates in 2015 to241 percent of Medicare rates in 2017.
- Prices varied twofold among states.
- Among hospital systems, prices varied nearlythreefold, ranging from 150 percent of Medicare rates at the low end to 350 to400 percent at the high end.
- Relative prices for outpatient services were293 percent of Medicare rates on average, far higher than the average price forinpatient care (204 percent).
Of the 25 states analyzed, eightstates – Michigan, New York, Tennessee, Massachusetts, Louisiana, NewHampshire, Montana and Maine – were exceptions with prices roughly equal forinpatient and outpatient services.
At the recent World HealthcareCongress held in Washington, D.C., Marilyn Bartlett discussed that when shetook the helm of the State of Montana Employee Benefit Plan in 2014, shedisrupted the status quo by implementing reference-based contracting with allMontana hospitals. This explains why Montana has equal pricing and possibly whythere were similar occurrences in the other seven states.
The Rand study made the followingrecommendations:
- Employers can exert pressure on their health plans and hospitals to shift from discounted charge contracts to contracts based on a multiple of Medicare or some other prospective case rates.
- Employers can use networks and benefit designs to move patient volume away from high-priced, low-value hospitals and hospital systems.
- Employers can encourage expanded price transparency by participating in existing state-based all-payer claims databases and promoting development of new ones.
- Transparency by itself is likely insufficient to reduce hospital prices, and employers may need state or federal policy interventions to rebalance negotiating leverage between hospitals and employer health plans. Such interventions could include placing limits on payments for out-of-network hospital care or applying insurance benefit design innovations to target high prices paid to providers and allowing employers to buy into Medicare or another public option that pays providers prices based on Medicare rates.
We must ask why it is so difficult for us (healthcare purchasers) to find out what we are paying for with healthcare? And how do we obtain the necessary data to make informed decisions?
On May 23rd, the Senate Health, Education, Labor and Pension Committee released a bipartisan ‘draft’ of legislation to create a national database of de-identified claims data, including prices.
Arecent article written by David Blumenthal, president of the Commonwealth Fundand others indicated that the Trump administration wants to make true pricinginformation available to patients, providers and other stakeholders. Anadministrative order would mandate public disclosure of prices negotiatedbetween insurers and providers. If either legislation or an executive order is accomplished,it would help consumers of healthcare make informed decisions.
