Wednesday, March 10, 2010

Another step in the right direction...

Many of you have argued cogently for market forces in medicine.  And as one of the two big issues (the other being universal coverage), cost control mechanisms have been hard to devise and garner support for.

One good step would be more price transparency.  For those of you who despair of anything so actually helpful coming to pass, behold, proof that we can at least begin to tackle this gargantuan problem.
Two days ago I wrote a post about why I think price tags could save American health care. One of the great forces of the U.S. economy is the price-conscious consumer. Collectively we manage to drive down the cost of everything from bar soap to tax preparation. Such is the nature of a competitive marketplace with transparent prices. So why not unleash that dynamic on the health care industry?
As it turns out, I'm not the first person to have this idea. In fact, there is currently a bill sitting in Congress that would do exactly what I'm proposing. On Feb. 25, Representative Steve Kagen—who happens to also be a doctor—introduced the "Transparency in All Health Care Pricing Act of 2010." The bill is 429 words (that's right—429 words, not pages) and already has 45 co-sponsors. I know a whole lot more about economics than I do about politics. Could someone out there please tell me how we can get this thing passed?
Here, read how brilliant it is:

(a) In General- Any and all individuals or business entities, including hospitals, physicians, nurses, pharmacies, pharmaceutical manufacturers, dentists, and the insurance entities described in subsection (d), and any other health care related providers or issuers that offer or furnish health care related items, products, services, or procedures (as defined by the Secretary of Health and Human Services) for sale to the public shall publicly disclose, on a continuous basis, all prices for such items, products, services, or procedures in accordance with this section.
(b) Manner of Disclosure- The disclosure required under subsection (a) shall--
(1) be made in an open and conspicuous manner;
(2) be made available at the point of purchase, in print, and on the Internet; and
(3) include all wholesale, retail, subsidized, discounted, or other such prices the individuals or business entities described in such subsection accept as payment in full for items, products, services, or procedures such individuals or business entities furnish to individual consumers.
Combine that level of price transparency with insurance that incentivizes consumers to pay attention to cost—e.g., co-insurance, high-deductible plans—and I think we'd start making a real dent in health-care cost inflation in a very short period of time. [More]

This week at various meetings several mentioned the idea of just eliminating insurance altogether, but that's hardly feasible, let alone wise. Insurance for all kinds of unpredictable things in life has been around for a really long time. (Probably starting with marine shipping).  As long as it is a transaction between policy holders and insurers, there will be those whose math skills who will allow consumers to offset inherently fickle fate while making a buck in the process.

The problem arises when another payer - government, employer, parents, etc. - interrupts this transaction. Whatever steps we can make to push toward more straightforward health insurance should reap considerable low-hanging economic fruit. Of course, efforts must be made to provide assistance for those who cannot even afford catastrophic coverage, or these efforts will fail for too much of the population.

At the very least, some kind of pilot program would be worthwhile.  As someone who has asked doctors what things cost, I've had strange reactions - and some surprising discounts.

Suppose a clinic with a new fMRI decided to have a 2-week sale to introduce themselves and their service?  Just as private medical labs are springing up to pretest for drugs (just to make sure before the interview) and pregnancy/paternity, I could see specialization really taking hold with concomitant economies of scale for more of medicine that we think right now.

It seems like we've been wrangling about health care forever.  It seems even longer if you are currently a have-not in our system. I remain hopeful we are simply handling this the way we seem to do all enormous issue - the hard way.

1 comment:

Anonymous said...

It is an embarassment to a capitalist country not to have health care pricing out in front. We pride ourselves about letting free markets work and then hide health care system.
Make pricing transparent and then remove buying it from employers and you go a long way to solving problems. Won't be much change to businees as they will pay workers more. Let workers have a health insurance deduction on their taxes.

John, think of how other things would be priced in the health insuranc model. The equipment dealer would not tell you the price of a tractor, and you would have to bargian with your Equipment Serive company by paying them a monthly fee for them to approve you to buy it! They would likely not alow you to change chisel plow points until you wore the shank down.

Think about this model in the grocery store. No prices ont he shelf, and you have a card from your employer that he bargained for you a certain rate. Health insurance pricing is just crazy!