Curmudgeon's Corner

Health Care Prices

Posted by Al Campbell on March 10, 2010

Healthcare, Political, Quality of Life, U.S., Wisconsin

Health care cost disclosure is a lynch-pin in the overall effort to bring consumers back into the equation, and to gain some semblance of control over the ever-increasing costs involved.

The governor has just signed a bill that requires disclosure by hospitals, surgical centers, imaging facilities and doctors.  This bill requires that hospitals disclose the average prices for the 75 most common inpatient and 75 most common outpatient services based on their contracts with health plans.  It also requires similar disclosure of the average costs for the 25 most common services delivered by free-standing surgical centers, imaging facilities and doctors.

Doctor’s practices where three or fewer doctors practice are exempted from this requirement, but I suspect some will want to comply or will ultimately be forced to comply by marketplace demands.

This gets at the net prices that are received from the health plans through confidential contracts in place between those plans and the providers.  The use of the average payment received gets around the language in most such contracts that compels the parties to not disclose the specific net prices that have been negotiated.

Consumer-directed health care has been a term used for quite a few years.  It refers to those health plans where either the consumer is using his or her own Health Savings Account (HSA) dollars or is using an employer-funded Health Reimbursement Arrangement (HRA) or Flexible Spending Account (FSA).  Where these approaches have been in use, notably such as at Serigraph in West Bend, WI and in Manitowoc County for the county’s employees, the results are demonstrating the validity of this approach in the real world.  And, they are saving money for both the employer and the employees while continuing the provision of high quality care.  The two are not mutually-exclusive as some would have us believe.

I have referred to personal experience that dates back to the early-1960s when our first child was born without us having health insurance as contrasted to the birth of our second child when we were covered by health insurance.  In the first instance, I was able to discern the fees that would prevail by talking with the doctor’s staff and by talking with the hospital…and I still recall the fees that we paid in the first instance.  I have no idea of the charges in the second instance because I was buffered by my health insurance contract from those realities.

Posted net prices averaged across the different insurance and health plan contracts will restore our ability to shop for health care except in those cases of an emergency. 

This is but one example of the free market’s favorable impact on health care pricing.  It demonstrates that there are ways in which we can reform the health care system using the free market forces versus the approach that uses government mandates up and down the line.

There may still be some unintended consequences but those are much more quickly resolved by marketplace forces than by government regulation.