The modern health care debate has largely focused around how many people have health insurance. But simply increasing the number of people who have health insurance can actually undermine the goal of increasing access. Increasing demand without increasing supply causes prices to go up — and the first people priced out are the most vulnerable.
Government intervention into the health care industry in the past century has failed us. Skyrocketing prices, misalignments in coverage and unaffordable insurance rates are the result of a long line of missteps and bad incentives. Until we focus on introducing true price transparency along with a major increase in the supply of health care, Utahns will struggle to afford the care and coverage they need.
Outpatient care makes up a large part of expenditures, and these type of consumers have the time and ability to consider price options if incentivized to do so. Just last year, I decided to finally get my deviated septum fixed. I decided to navigate the process as an average individual would — letting my doctor lead the way.
I was told all sorts of information about the procedure and its impact on my body — but never my bank account. Throughout all the conversations and forms, I was never informed about the price or alternatives that might reduce the cost. Nobody even talked about it.
Can you imagine having this happen when fixing your home, your car, your computer or anything else? We expect to be informed consumers in nearly every aspect of our economic life — except, oddly, the aspect that is most important to sustaining our life.
So the final bill came in the mail — a bill I had intentionally not sought to influence, investigate or decrease. I was, after all, stepping through the system as it’s currently designed, rather than pushing against the tide to try and change it. And the final amount was staggering.
Knowing the final amount, I then did some research and discovered a variety of surgery centers — including in Utah — where patients are explicitly informed about the final cost of their procedures. Their amount was far lower than what I was being asked to pay.
This upcoming legislative session, you might see several bills dealing with this price transparency issue, allowing you and I to better determine the costs of out-of-pocket health care services and what the average negotiated price is for insurance companies.
But while that’s an important first step, we shouldn’t stop there. In my case, and too often in other cases, even if we did know how much a certain procedure or test costs, we would have zero financial incentive to investigate where to find the best price for that health care service. If insurance is footing the bill, why bother trying to research lower-cost options?
This is where the idea of having the “Right to Shop” ended up on our radar. True cost transparency must be coupled with market incentives for the health care consumer. The simplest form of these potential incentives is cash. Save your insurance company money, and then you get a cut.
And this doesn’t mean you have to sacrifice on quality of service. Research has shown that within the health care industry, cost of service usually has little to do with the quality of service. Instead, consumers are able to make the best choice for themselves as they factor in travel, customer service, wait times, as well as costs.
Simply put, consumers need to have a reason to save. Simply posting prices at hospitals and doctor’s offices will do little to dramatically decrease costs if consumers have no reason to care what the cost actually is.
Current regulations have caused the prices of high-deductible plans to increase as well as the cost of insurance for young people, moving the industry in the opposite direction of affordability. Instead, we need more high-deductible plans, less coverage mandates, and let everyone have access to a health savings account, or HSA.7 comments on this story
HSAs hit directly on the point of helping consumers pay attention to costs. Getting the most out of your HSA dollar will be a key consideration when selecting care. Raising contribution limits and allowing HSA funds to be used for other family members (especially elderly ones) will improve the robustness of this option and increase its attractiveness.
Commonsense solutions are needed that will lead toward a health care market that can work for everyone, rather than pricing out the poor. The wrong incentives have created this mess, and it’s time we paid attention to those incentives to fix our health care system.