Reading up on health care I notice that prices for the same procedure can vary drastically based on where you go, both nationwide and within a locality.
So why not create an insurance plan that negotiates transparent pricing with the lowest cost 10-20% of inpatient and outpatient providers, and only offer coverage to those providers as in network? Add in coverage for generic drugs and you seem like you’d have an affordable basic health insurance plan. It wouldn’t cover ‘everything’ and it would limit your options, but ideally it would cost a lot less than traditional insurance through a major carrier and would be 90% as good.
It wouldn’t work in rural areas where selection is limited, but if you live in or near a large city with a large number of health care providers, and are willing to only use 1/10 of the medical facilities available it could be fairly affordable. Plus if you are willing to travel for elective surgeries to low cost areas within the US (or internationally) it would cost even less.
I’ve used the website www.pharmacychecker.com and noticed the same thing with drug prices, they vary wildly even when you check places close by. I once was looking for two drugs. Pharmacy A had one drug 3x cheaper than pharmacy B, but the other drug was several times more expensive. The other pharmacy was the opposite. So I got one drug from one pharmacy and the other drug from the other.
I don’t know how the US health insurance system is structured. Has anything like this been done? I’d trade having a lesser selection of providers in exchange for lower premiums.
The article concludes that people continue to argue for a free market, but in a free market you would know the prices. I’d love for an organization to establish a database that kept all prices transparent on what was being charged in the US for all of the various procedures. If we knew, many could afford healthcare without insurance if it wasn’t the law and mandatory to be required. I still don’t have it, but will pay the extra tax penalty this year.
I think most people on some level trade selection for lower premiums already; I just don’t think that is a real way to cut costs in the long run.
There is also the issue that prices have little to do with costs. Mostly prices is just a “means to the end” of being profitable. The fact that a drug or procedure costs x times more in one place versus another doesn’t always tell you much. Transparency would be good, but it may have the unintended side-effect of people wanting more expensive care because it seems better (among other things). Kinda like how people think more expensive wine is always better, or how people buy name brand pain relievers instead of cheaper generics. Just knowing your paying more also doesn’t help much if you are not footing the bill, and you have no basis for understanding the service being offered.
Hm, knee replacement - 1 week in hospital, 6 or more weeks physio outpatient.
Get it done at Yale-New Haven, 75 miles from my house. I could use my local physioterrorist who is located 15 miles from my house.
Go to Oklahoma, 1 week in hospital, 6 weeks at some facility, if I need longer, stuck there. Have to pay transport, food, lodging both ways driving, pay to lodge at a physio facility. No support system [hubby, who works and could not take time off if we want to pay our bills] not to mention I doubt Tri-care would like me to go to a rehab place half way across the country.
Besides, if I were to go elsewhere to get one done, I would go to Fresno where my mother in law and sister in law both work at a rehab hospital, and I could live at my mother in laws house for rehab.
You will find that people prefer going to a local facility so they have familial support, and can stay at home. Well, I also really like the staffing at Yale-New Haven, they have managed to keep me alive for my medical stuff over the past 5 years. The anesthetist is familiar with my health issues and is a dream to work with.
It is already done. Your article is rather misleading, hospitals charge widely varying amounts to Medicare, but the charges are more or less meaningless*. Medicare pays a set amount regardless of who the provider is or how much they charge.
*Apparently the hospitals still bother for tax-accounting reasons.
The ACA requires hospitals to publish prices for standard procedures starting in 2014.
I’m kinda sceptical it will make much difference, since almost no-one ends up paying the out-of-pocket rate for things anyways. People with money usually have health insurance/Medicare which negotiate their own rates, while people without insurance are usually poor enough that the hospital ends up writing off much of their bill anyways. But in anycase, we should have a decent natural experiment in the next year or two to find out.
I think that would be more misleading then helpful. Such prices would be thrown off by what medicare/medicaid are charged, and wouldn’t have any bearing on what a person paying out of pocket would pay.
You could just do the median of out-of-pocket charges, but that would be misleading as well, since the hospital ends up writing off a lot of what the initially charge to out-of-pocket payers.
In the end, I don’t think there’s really anyway to approximate a free market for essential health-care services due to the simple fact Americans are (happily) unwilling to allow people to be unable to gain needed care due to inability to pay. That’s the root reason why hospital payments are such an opaque mess of charges to insurance companies, the gov’t and charges to out-of-pocket payers with no expectation that they’ll pay. And so long as that underlying system remains a complicated mess, there’s no way to summarize it for consumers in a way they’ll find useful.
If the price differences were between Oklahoma and New Haven, then I could see the reason. But the study indicates that there are huge price differences in one town - so you can stay home and still get a better price. Would the anesthetist be worse if he or she worked for a less expensive provider?
I’d guess that the prices charged to large insurance companies show a lot less variation, but I don’t think that was covered by the study.
That is more or less one of the initiatives health insurance companies are currently doing to avoid costs. The problem with doing it exactly as proposed is the bottom 20% might have bad outcomes that would increase costs in the long term, and the bottom 20% of the providers might not have capacity to see everyone, and members and employers might refuse to buy plans like that. The present initiatives are called Tiered plans, or Extended Network plans, where the more expensive providers (generally big city hospitals and famous providers like Mayo, Cleveland Clinic, etc are placed in a tier that makes it substantially more expensive if members choose to use them for elective outpatient procedures. If you get in a car crash in Rochester and are taken to Mayo , you aren’t going to be penalized, but if you need cancer chemotherapy and decide to go to Mayo instead of your local hospital, you’re going to pay. Typically the deductible / out-of-pocket maxes are double than for more cost effective (we use outcomes in the weighting as well as price) providers.