Why It's So Hard To Shop For Health Care
Shopping for health care is kind of like going to a grocery store where there aren’t any price tags. That jar of spaghetti sauce might cost $4, or maybe $50. But in health care you typically don’t find out prices until you get to the checkout counter. People with one kind of card pay one price, those with another pay a different one, and you may do better or worse if you offer cash.
Last year Montana lawmakers, frustrated by how hard it is to shop for the best deal in healthcare, set up a special committee to find solutions. That committee meets for the first time Wednesday.
Transparency in health care pricing is a famously tough nut to crack, and NPR has done a lot of reporting on it. I had a conversation about that with Gisele Grayson, a health editor at NPR in Washington, DC.
Eric Whitney: Gisele, why do different people pay different prices for the exact same healthcare procedure?
Gisele Grayson: Well, haven't you asked the million dollar question.
For a long time healthcare prices have been invisible to consumers, and we can think of the healthcare system having three basic actors; You've got your consumers, which is us, you've got your providers, which is doctors and hospitals, and you've got your insurance companies. And insurance companies have typically been the middlemen between us and our doctors. They negotiate with our doctors and hospitals to get the best deals.
But we don't necessarily know what those deals are. So your insurance company has lots of power to drive hard bargains with a hospital or doctor's office, and they they might pass some of that savings on to you, or maybe they keep a little bit for profit.
But sometimes hospitals and doctors are also powerful. The insurance companies might negotiate a good price for, say, something like an MRI or a knee replacement at a small hospital, but they may not get the same price for a big hospital that might have a lot more facilities that you might want to go do. Or maybe a hospital has such a great reputation that insurance companies have to pay pretty much whatever they ask, because all their customers want to go there.
So it's a process by which the consumer has been kind of sidelined, because the insurance companies and the providers set most of the terms.
GG: Yeah, that's right, and we just mentioned Medicare is a big player in this world. But so are private health insurance companies, Medicaid, children's health insurance companies, state employee health benefit programs, prescription drug plans, dental plans, private insurer plans, and then exchange plans - there's so many different insurers fitting the bill, and each one negotiates its own prices with the entity we're talking about - the hospital, the doctor's office. So, it's very hard to come up with any standard tool.
There are insurers, and there are companies that are trying to make this more transparent, but because of all these negotiations we just mentioned, unless you know the exact terms of your exact plan, you're not going to get an exact price when you, say, want to know what a knee replacement costs in any given hospital.
EW: And, more and more, patients are paying on their own for more and more medical procedures. Even before the Affordable Care Act passed in 2010, the trend was for insurance companies to charge higher co-pays, or have bigger deductibles as health care prices just kept climbing.
GG: Yeah, exactly. A lot of us are on the hook for a lot more of our health care than we used to be, no matter what kind of insurance we have. So, that was was a top-down effort to try to get people to be more conscious and be better consumers, so we'd shop around.
But, interestingly, the tools weren't there, and they're still very, very in the early stages. There are a lot of efforts and a lot of companies trying to make tools, but interestingly, despite the fact that consumers should be looking around more, research from different companies shows that a lot of people don't even go to these transparency tools, and it's unclear why. Whether it's because you might use a tool, and then you go in and you find out that your MRI is, you know, $1,000, then you need more work, and your bill is nothing - the end bill is nothing what you thought it would be in the beginning.
It's unclear why customers are not using these tools, but they are not as strong and as well used as I think some of these companies want them to be in the future.
EW: So these price comparison tools that you're mentioning, some of those are efforts of state governments trying to mandate that prices have to be listed publicly, and there's other grassroots, crowdsourcing kinds of efforts. But, state governments can't just say, 'Hey hospitals, you have to publish how much you charge everybody for procedures?'
GG: No, if only it were quite that easy. Because of the mix of insurers that we were talking about before, your private, your public, it's almost impossible to compel them all to put their prices out there.
No, a story we had last year on our health blog, Shots, reported that about 18 states have set up databases where they're trying to compile as much information as possible, how much these entities actually pay for each claim that they get, but governments can't force companies that operate across state lines to reveal what they're paying. A Supreme Court ruling in 2016 basically said that multi-state companies can't be subject to 50 different laws from every state, at least when it comes to what they pay for healthcare.
EW: So, even if hospitals want to release what they charge everybody, insurance companies can still claim that it's proprietary and prohibit it's release?
GG: Right, and because big companies provide health coverage to so many people, if you don't know what they're paying, you have a pretty big hole in your database. So you can't really say Hospital X gets paid Y dollars for a mammogram, because you only know that's what they charge maybe a minority of their patients.
EW: And hospitals can't just charge one price for everybody?
GG: Well, they could. But just like there's some insurance companies that are really big, you might have a hospital system, say, that's the only big player in and area, and they want to negotiate the best payments they can. And they also have a balance sheet work out. As we've been mentioning, there's a lot of different kinds of insurance, and often government insurance - Medicaid and maybe Medicare - might not pay all that it costs to treat somebody. And then you've got your people who show up with no insurance at all, and the hospital has to eat those costs, or at least some of those costs. So they look at the mix of who's showing up in their hospital, and they have to make their bottom line work.
So, often that has the result of making private insurance cost a little bit more.
EW: And, most hospitals here in Montana are little non-profits, so I guess it'd be hard to fault them for trying to charge big insurance companies more if they're in a place where people don't have insurance or just can't pay their hospital bills.
You said there are grassroots, crowdsource-y kind of attempts to make prices that doctors and hospitals charge public, though?
GG: Yes, there are efforts to do this, and some of them come from the insurance companies themselves. Some hospitals make very small efforts to try to put prices out there. A few years a go a few big city public radio stations worked with a company called Price Check to try to gather information about people in a certain area. How much they might pay for, say, a knee replacement or an MRI and gather that data, so a consumer could potentially choose the hospital that costs less.
One of the things that's missing from some of these efforts is quality data, too. There's the assumption that if you're paying more you're getting more, that's not often true in healthcare. When you start adding whether a procedure is a high quality procedure, and you get well taken care of, that's even more elusive than even finding out the price.
EW: Is there any evidence that those prices have caused hospitals or doctors to look at what everybody's charging and maybe bring their prices down?
GG: I'm sure there are, and I don't have any off the cuff that I know for sure. But I think that was part of the effort, too is to let consumers know what is going on, but also let doctors in on what other doctors or hospitals might be charging and that would, presumably some of the higher ones might feel the pressure to lower their prices a little bit.
And those efforts are great, but they're also labor intensive, and the price information is useful, but it's crowdsourced, so it's not comprehensive. You might not be able to get as low a price based on what insurance you have, and there might be errors in it from people misplacing a decimal point, or any other mis-typing a number or something.
NPR's Shots blog is - we're not going to do something as comprehensive as Price Check, but we're going to take one medical bill a month here and dissect at and look at what it really means, and we encourage your audience to look at that, and maybe send in their medical bills for analysis.
EW: Cool. I've posted links to some of those public radio price check tools on our website. (Here's a link to San Francisco station KQED's, which is representative of other efforts at KPCC in Los Angeles, WHYY in Philadelphia. Those stations partnered with a company called Clear Health Costs.)
I guess you could argue that maybe this shouldn't fall to news organizations to do this, given what you said about the Supreme Court decision, couldn't Congress just pass a law that says, 'Hey, everybody has to report how much they charge for healthcare?'
GG: I suppose they could. I don't know exactly what Congress could or will do. I do know they talk a good bipartisan game, especially about drug prices, with all the crisis of the EpiPen and other drugs gong way, way up last year, a couple years ago. But as I've been talking about, there's a lot of resistance. In December, NPR aired a story that looked at America's pharmaceutical lobbying, they spend upwards of $57 million last year on lobbying at the state and federal level. So there's a lot of money in healthcare and it buys a lot of influence.