Healthy Policy: Exactly what price transparency isn't going to do

March 20, 2006

Exactly what price transparency isn't going to do

From the opening paragraph of this WaPo article:

Hospital bills are about to become less mysterious. Within a few weeks, the Bush administration plans to publish the prices Medicare pays for common medical procedures, a move that advocates for the poor say will pressure hospitals to give uninsured patients the discounts provided to people with insurance.

I hate to get all nit-picky on this, but I have to.

First of all, this is not going to make hospital bills less mysterious AT ALL. There will still be five million billing codes, five million acronyms and foreign phrases, and lists and lists of things patients are charged for. No, this has nothing to do with simplifying bills.

What it does do is list the price Medicare pays for certain procedures.

But I'd like to see just exactly how, especially in the light of Medicare Part D, this listing is going to "give uninsured patients the discounts provided to people with insurance."

Really though, in the interest of fairness, let's look at how hospitals work with insurance companies. The insurance company agrees to cover services at a given hospital, and the hospital agrees to charge discounted prices because of the guarantee of patients.

What happens when an individual comes to the hospital? They have no contract with the hospital. If they're uninsured, they have no guarantee (nor can they make one) that they will return to the hospital for further business. And lastly, if they're poor and uneducated, they have no access to these price lists, have never heard of these price lists, and certainly have no clue how to use price lists to leverage their payment.

That being said, Medicare, with its huge bargaining power, should have control over how much it pays for services, and use that as general tool to influence more uniform pricing. Price transparency is generally a good thing, and something that we could certainly use more of.

But let's not be naive about what price transparency will accomplish.

March 20, 2006 in Consumer Directed Health Care, Health Care Spending, Hospitals | Permalink

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/t/trackback/590259/4494512

Listed below are links to weblogs that reference Exactly what price transparency isn't going to do:

» Exactly what price transparency isn't going to do from Marketplace.MD Blog
[From Kate Steadman at Healthy Policy] Let's not be naive about what price transparency will accomplish...[read... [Read More]

» Updated: Pricing Transparency: An Interesting Idea, But . . . from Envisioning 2.0
Kate Steadmans got a great post on her blog about pricing transparency and what it isnt going to do. Check it out by clicking here. A heated debate has recently flared up over the Bush Administration’s proposal that hospitals disclose... [Read More]

» Price Transparency is the new “H.S.A.” from Hayek, MD
Price Transparency is hot right now. Just read the news in the Washington Post, the Wall Street Journal,... [Read More]

» Price Transparency is the new “H.S.A.” from Marketplace.MD Newsletter
Price Transparency is hot right now. Just read the news in the Washington Post, the Wall Street Journal,... [Read More]

Healthy Policy

A journey through policy, progress, and being a patient by Kate Steadman

March 20, 2006

Exactly what price transparency isn't going to do

TrackBack

Comments