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Teach a man to fish, and he’ll sit in a boat all day drinking beer.

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Dumb motherfuckers cannot understand a consequence that most 4 year olds have fully sorted out.

I would try pessimism, but it probably wouldn’t work.

Bad people in a position to do bad things will do bad things because they are bad people. End of story.

The “burn-it-down” people are good with that until they become part of the kindling.

Every decision we make has lots of baggage with it, known or unknown.

Someone should tell Republicans that violence is the last refuge of the incompetent, or possibly the first.

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This fight is for everything.

Balloon Juice, where there is always someone who will say you’re doing it wrong.

People really shouldn’t expect the government to help after they watched the GOP drown it in a bathtub.

When I was faster i was always behind.

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Republicans don’t lie to be believed, they lie to be repeated.

I have other things to bitch about but those will have to wait.

“Alexa, change the president.”

If ‘weird’ was the finish line, they ran through the tape and kept running.

Republicans don’t want a speaker to lead them; they want a hostage.

In after Baud. Damn.

You are here: Home / Anderson On Health Insurance / The limits of price transparency

The limits of price transparency

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In the Health Affairs blog, Brian Blase argues that a policy price tag for future medical system pandemic aid should be price transparency:

it’s time for these industries to help American families and businesses and drop their fight against health care price transparency. This starts by equipping Americans—both families and employers—with tools to be better purchasers of health care. Specifically, Congress should lock in the Trump administration’s price transparency rules to end the legal battles over them and to give the American people the information they need to make smarter decisions about their health care and coverage. Enhanced shopping will increase competitive pressures in health care markets and lead to lower prices and enhanced quality of care.

Price transparency is not a panacea. It probably helps ( depends on how transferrable the Danish concrete market is to the US healthcare market) but it is not a panacea.

Sarah Kliff in today’s New York Times reports on price transparency and legalized looting for COVID testing:

In a one-story brick building in suburban Dallas, between a dentist office and a family medicine clinic, is a medical laboratory that has run some of the most expensive coronavirus tests in America.

Insurers have paid Gibson Diagnostic Labs as much as $2,315 for individual coronavirus tests….

In Texas alone, the charge for a test can range from $27 to the $2,315 that Gibson Diagnostic has charged….
The recent CARES Act requires that insurers cover the full cost of coronavirus testing, with no co-pays or deductibles applied to the patient. The health plans must also pay an out-of-network doctor or lab its full charge so long as the provider posts that “cash price” online.

Under current law, as long as there is a listed price somewhere, the lab can charge and get paid whatever it thinks it can get away with before someone calls in the press for public shaming.

Price transparency is probably helpful at the margin but as long as there is no other tool that helps to reduce the informational complexity and probable “halo” effects of high prices, price transparency is a limited tool.

Reader Interactions

9Comments

  1. 1.

    Starfish

    People are gaming price transparency by posting it on a website ten pages deep in a document that is not searchable. That issue needs to be addressed.

  2. 2.

    Ted Doolittle

    Yes it is a very limited tool, but there is a justice/fairness component. The health plans increasingly rely on high deductible plans, and thus the insurers and providers are negotiating prices that increasingly are not even paid by the carriers. The prices are paid by us, but we don’t get a chance to participate in the negotiations, and usually don’t even know the price until the bill comes.

  3. 3.

    Eunicecycle

    I think it is very frustrating that there is nowhere to call to find out how much the negotiated price is, or at least no one will tell you. I even discovered, that different facilities in the same healthcare system can have different prices! I needed a follow-up x-ray so went to the facility I usually use. There was an hour wait, so the receptionist said I could go to another facility about 1 block away, in the same system. So I did, and when I got the bill it was 4 times more than the other facility! The more expensive facility used to be a surgical center that was changed to more of an urgent care about 5 years ago, but had always been part of the same hospital system. Oh and my insurance is part of the system, too.

  5. 5.

    dirge

    Generally more price information is going to be better than less, but it’s only going to lead to an efficient market in the absence of market power, agency conflict , and information asymmetry.  The idea that patients “shopping” for care is going to fix anything depends on their ability to do cost/benefit analysis, which depends not just on knowing the cost, but also the benefits.  So no magic of the invisible hand until a majority of patients are also medical specialists in all the treatments they’re receiving.  Then we can get to work on perfectly aligning the incentives of insurance companies with those of their policy holders, which should be reasonably straightforward once we’ve gotten rid of the profit motive and re-educated everyone to value each other’s lives as much as their own.

    So…  price transparency is a great start on a totally feasible project.  Yay.

    //

  6. 6.

    daveNYC

    Price transparency isn’t going to make much of a difference for a majority of people who need to utilize the health care system.  It might be nice for someone who just needs an annual physical, but anyone who goes in with an actual health issue isn’t going to be able to do much about one office charging more for some blood work or whatever because they won’t actually know what they need done before they’re in the office.

    I mean, what is the expectation here, that the doctor says he’s going to test X, Y, and Z, and then hand the patient a list of the cost of each of those tests so they can go comparison shopping?  Maybe clip some coupons to help lower the cost?

    It’s depressing that this do nothing idea is being pitched as a policy ask.

    From my latest adventures in the Czech health care system: A trip to the GP, two trips to a specialist with a ‘fun’ procedure done, and some pills from the pharmacy ran me $20 out of pocket.  It’s not just the low price that’s nice, it’s the fact that I can go to the doctor and never have to worry about what it’s going to cost me.  That peace of mind is almost as valuable as the actual care I get.

  7. 7.

    Yutsano

    I’m right in the thick of this. I had so much weakness in my body that we had to call the paramedics just to get me up. Since their choice of hospital was unsuitable, we were left with two other options. I wasn’t exactly going through comparing prices at that time!

  8. 8.

    Greg in PDX

    Because of a genetic condition I have to get phlebotomies done every so often. I walk in they take a pint of blood and I walk out. 1/2 hour tops. My insurance pays it. Never a problem. But then one day I was mistakenly sent a bill meant for my insurer. $1600. For a 15 minute one staff procedure. Incredible.

  9. 9.

    Another Scott

    @Greg in PDX: Sometimes expensive fees can be justified.

    Smithsonian Magazine:

    […]

    Before long, the greatest scientific minds of the time were traveling to Schenectady to meet with the prolific “little giant”; anecdotal tales of these meetings are still told in engineering classes today. One appeared on the letters page of Life magazine in 1965, after the magazine had printed a story on Steinmetz. Jack B. Scott wrote in to tell of his father’s encounter with the Wizard of Schenectady at Henry Ford’s River Rouge plant in Dearborn, Michigan.

    [ image ]

    Ford, whose electrical engineers couldn’t solve some problems they were having with a gigantic generator, called Steinmetz in to the plant. Upon arriving, Steinmetz rejected all assistance and asked only for a notebook, pencil and cot. According to Scott, Steinmetz listened to the generator and scribbled computations on the notepad for two straight days and nights. On the second night, he asked for a ladder, climbed up the generator and made a chalk mark on its side. Then he told Ford’s skeptical engineers to remove a plate at the mark and replace sixteen windings from the field coil. They did, and the generator performed to perfection.

    Henry Ford was thrilled until he got an invoice from General Electric in the amount of $10,000. Ford acknowledged Steinmetz’s success but balked at the figure. He asked for an itemized bill.

    Steinmetz, Scott wrote, responded personally to Ford’s request with the following:

    Making chalk mark on generator $1.

    Knowing where to make mark $9,999.

    Ford paid the bill.

    […]

    OTOH, knowing how to, and successfully drawing blood, does not seem to be worth $1600×4 = $6400/hr.

    :-/

    Cheers,
    Scott.

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