Medical Costs Could Fall by $36 Billion Annually With Price Transparency
In most markets around the USA, patients are incurring lower medical costs courtesy of a new wave of cash discounting for healthcare procedures and services.
Cash discounts lower medical costs by up to 89% in some cases as long as you know how to play the discount game.
If you tell the hospital about your insurance … they have to charge you the higher price and you will have to come out of pocket for your deductible.
If you don’t tell them about your insurance and pay with cash, check or credit card, you get the lower medical costs – in some cases, MUCH lower – but the payments don’t apply to your deductible.
What if everyone paid the lower price?
A white paper from Thomson Reuters reports on their study of what “price transparency” would mean to overall medical costs in the US on an annual basis. They come up with an annual savings of over $36,000,000,000.00 in medical costs – and their numbers are very conservative (see below).
The study analyzed the variation in prices in 300 “shoppable” procedures (high-volume procedures that consumers would plan for and schedule in advance) in every US market in their database.
Then they looked at the savings if prices lying above the median were simply moved to the median for each procedure. Their finally tally showed a savings of 3.55% which if you multiply it by the 108 million Americans under age 65 who are insured by their employer = $36 Billion.
How can a patient get this price information easily?
In most markets — you simply can’t. Pricing for healthcare procedures is a black box.
Try this experiment.
Call your doctor or hospital and ask them what it would cost you for a simple procedure like a chest X-ray or EKG. You ONLY want the procedure and you are paying CASH.
If they can answer your question quickly and easily … congratulations. You might want request they put those medical costs up on the web — so you don’t have to call next time.
However, the more likely scenario is that they will have a great deal of difficulty giving you a quick answer. In some cases you will be told, “No one has ever asked us that … I’m sorry, we will have to call you back.” If you can get the information and you call several clinics, the prices are likely to be wildly different. You won’t find pricing information on anyone’s website.
The Thomson Reuters report calls this a lack of “price transparency”. In many cases it is a simple case of price availability. They assume that patients would choose to lower their medical costs if they could get price information easily. Makes sense to me.
Imagine what true healthcare price transparency might look like.
– Imagine a price list like the one at the drive through for McDonalds — except that this one shows the hospital lab and procedure prices and is posted on the wall in the lab reception area.
– Or a page on your hospital website giving you today’s cash prices for all their procedures
If that level of transparency ever happens I predict medical costs would drop for two reasons
1) You would find the differences between the insured price and cash price vanish over night. That discrepancy in medical costs would never stand up to public scrutiny.
2) Price competition would break out between hospitals in the same market resulting in lower medical costs for everyone. Imagine that !
And the next time you want to pay cash for a colonoscopy because insurance won’t cover it … you will be able to find the clinic/hospital with the lowest medical costs quickly and easily — most likely at a price well below what is being charged today.
Here’s the link to the Thomson Reuters Medical Costs with Price Transparency Study
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