Below, a guest post by Naomi Freundlich. Long-time readers will remember Naomi as the person who helped me write HealthBeat before we both left The Century Foundation in 2011. She now has her own excellent blog, Reforming Health
In this piece, she describes what it is like to live with a high-deductible health plan and find yourself bargaining with doctors when trying to get care.
Let me add that beginning in January of 2014, comprehensive, affordable insurance will be available in the Exchanges– along with subsidies. This should mean that no one will have to sign up for a plan with a $4,000 deductible ($8,000 out of network) plus co-pays.
(Though I realize that some upper-middle-class families who earn just a little to much to qualify for a subsidy may have a hard time finding affordable insurance in the Exchanges. But so far, the pricing in states like California and Colorado is encouraging. I’ll write more about this as we find out more about how much insurance will cost in other state Exchanges)
Nevertheless, next year some health care providers may try to charge patients more than the insurer will pay. This is called “balance billing.” In that case, patients will need to shop for physicians who accept the insurers’ reimbursement as payment in full.
My guess is that most heatlh care providers will discover that there just are not enough very wealthy patients out there (even in New York City), able and willing to pay more than either Medicare or an insurer will pay.
by Naomi Freundlich
I’m not a big fan of bargaining and my half-hearted attempts to get a better price for a used car, garage sale find or contractor’s service have been mostly unsuccessful. There’s always that nagging feeling that the seller is laughing with delight once I’m gone, thinking, “I really pulled one over on that rube!”
And so it has come as somewhat of a shock to me that medical care has become the new garage sale, as far as haggling goes.
First we found out that hospitals have “chargemasters” that hold the list prices for everything from knee replacements to aspirin tablets, and that these prices differ wildly between hospitals; even those in the same city. We also know that insurers, both private and Medicaid and Medicare, never pay these list prices but instead bargain with hospitals to pay substantially discounted prices. The only ones not getting in on the discounts are the uninsured or under-insured people who get hit with the full list price of hospital care.
The same thing happens with doctor bills. If you’ve ever compared what your doctor bills your insurer with what your insurer actually agrees to pay, it’s clear that there is a lot of bargaining going on. If the list price of an office visit is $125, the insurer pays $60; for a $200 lab test, the insurer reimburses $70, and so on.
A recent New York Times article, “The 2.7 Trillion Medical Bill,” focuses on the cost of colonoscopy to help explain how health care spending can be so much higher in the U.S. than other developed countries. In the article, patient bills for their colonoscopies ranged from a hefty $6, 385 to a whopping $19,438. Meanwhile, their insurers all negotiated the price down to about $3,500. As Elizabeth Rosenthal of the Times notes, ” this is still far more than the “few hundred dollars” that a routine colonoscopy costs in Austria or Italy.
Why do we have such price inflation here in the U.S.? Our for-profit health care industry has a lot to do with it, as does the maddeningly unregulated nature of the business. Rosenthal writes: “A major factor behind the high costs is that the United States, unique among industrialized nations, does not generally regulate or intervene in medical pricing, aside from setting payment rates for Medicare and Medicaid, the government programs for older people and the poor.”
David Blumenthal, president of the Commonwealth Fund tells the Times; “In the U.S., we like to consider health care a free market.” He adds, “But it is a very weird market, riddled with market failures.”
Now back to haggling. In the last year, my family—like many others in the nation—has been covered by a high-deductible insurance plan. Before our plan kicks in to pay for doctor bills, prescription drugs or diagnostic tests, we must meet a $4,000 in-network deductible. After that, we still have co-payments and also face an out-of-network deductible of $8,000. Now responsible for so much out-of-pocket health spending, I’m face to face with Blumenthal’s “weird market.” It’s a market where no one tells you the price of office visits beforehand, doctors have no idea how much an MRI they’ve just ordered is going to cost, and you end up paying dearly for not being an aggressive shopper.
Here is an example of this new reality. I recently had a bike accident and ended up with a deep gash between two toes. Sewing this wound up was not simple; I had waited three days to address the problem (college graduation took precedence) and the cut was in a very tricky spot. The doctor x-rayed my foot to rule out a fracture, took a swab to rule out infection, cleaned the wound, gave me numbing injections and sewed it all up very thoroughly. He bandaged the foot and gave me a surgical shoe to wear to keep my weight off my toes. Then we talked money. I told the doctor that I had “crummy insurance” with a $4,000 deductible so would be paying out of pocket for his bill. He nodded knowingly and said something to the effect of “I’ll give you a good price…”
Into the garbage went the swab that had been destined for a diagnostic lab. (Saved $175). Down went the price of the surgical shoe; (“I’ll give it to you for my cost, $25.”) Into my bag (unfilled) went the antibiotic prescription. All the supplies, the surgery (also known as stitches), the anesthetic, and two follow-up visits were bundled into a single price of $650—a bargain, I was assured. I thanked my doctor, gave the office assistant my insurance information so the charges could go toward meeting my deductible and off I limped, feeling as though I had just scored a great deal on a used car. Or had I?
With the dawn of “consumer-directed care,” patients are being asked to take an active role in seeking out medical bargains. Those of us thrown into this mess know that we are woefully unprepared for this task. My husband was prescribed an MRI-guided cortisone injection into his hip not long ago. He asked the orthopedist how much this procedure would cost and the doctor had absolutely no idea but recommended an imaging center he is affiliated with. When my husband called the center and asked how much the procedure would cost, they told him it would run about $2,000. This seemed really high (and again, it would be coming out of pocket) so he called the doctor’s office and got a referral to another imaging center from the office assistant. The price of the same procedure was just over $800. Seemed like a bargain, right?
This anecdote will no doubt warm the hearts of conservatives who sing the praises of consumer-directed care and the power of market forces to drive down prices. My take on it is that my husband and I were just lucky that we had enough knowledge about pricing and had the time to haggle. Most people don’t have the wherewithal to compare prices—they are sick and need immediate treatment, get admitted to a nearby hospital or get sent to a particular imaging center and find out later how much things costs. Prices are not listed on the wall; you can’t find them easily online and NO ONE EVER TELLS YOU HOW MUCH THINGS COST. When we do bargain or seek out cheaper providers we never really know if the deal we’ve gotten is really that great.
I’ve got to say that the idea of turning health care into a giant used car lot doesn’t hold much appeal for me. I’d much rather know that my providers are working from a standard price list—much as they do for Medicare and in virtually every other developed country. “Let’s Make A Deal” is a television program; it shouldn’t take place in a doctor’s office.