Thursday, August 25, 2022

"It's the prices, stupid!". And they won't tell us what they are...

You wouldn’t buy most things if the price were not labelled, and certainly not if price were not available on asking. Sometimes shopping on the Internet is frustrating because that the prices are not always apparent. When I had to get my sewer routed out, the plumber told me what it would cos (a lot), and my only choice was to have a blocked sewer or try to find another plumber who might be cheaper. But I had that choice, and he told me the price. Even in the American bastion of car buying, where “negotiating” is a tradition, and while YOUR first question is “what is the price”, theirs is “what are you trading in [so we can quote a higher price]”, this is changing, with set prices at many dealers and alternative vendors like CarMax and Carvana.

Where it is almost never true is in purchasing health care, and it is worst when you are most vulnerable and in urgent need of a service -- sometimes even more urgent than routing your sewer line! We think we would almost never buy something first in order to find out what it cost – that would be crazy --  but in fact that is the title of a video by Martin Schoeller recently featured in the New York Times: How Much Does Your M.R.I. Cost? Buy It First to Find Out.’ And that is what it shows. The prices aren’t available in advance, there is no published price list, there is no bar code for the clerk to scan, and no one, pretty much, can tell you how much it will cost. It is not just MRIs, of course; that is just the headline; it is all tests, procedures, surgeries, and consultations from specialists.

One of the people interviewed by Mr. Schoeller, who had severe injuries as a result of being two feet from where to bomb blew up at the Boston Marathon in 2013, says “I had these procedures done, and now I’m getting the prices. It should have been the other way; I should have had the prices first.” Of course. But this is the story all of the people he interviews – regular people, just like us, he notes -- whose lives have been upended twice, first by their health problem and then by the cost that they were never told about, “whether it is through surprise bills or straight-up price gouging.”

In an old expression, you might say “there oughta be a law”. The amazing thing is that there is a law, or at least a federal rule. The Hospital Price Transparency Rule went into effect on January 1, 2021. Per the website of the Centers for Medicare and Medicaid Services (CMS)

Hospital price transparency helps Americans know the cost of a hospital item or service before receiving it. Starting January 1, 2021, each hospital operating in the United States will be required to provide clear, accessible pricing information online about the items and services they provide in two ways:

1.      As a comprehensive machine-readable file with all items and services.

2.      In a display of shoppable services in a consumer-friendly format.

This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.

CMS plans to audit a sample of hospitals for compliance starting in January, in addition to investigating complaints that are submitted to CMS and reviewing analyses of non-compliance, and hospitals may face civil monetary penalties for noncompliance. Access a list of hospitals that have been issued CMPs.

That sounds good, right? There is only one problem. They’re not doing it. The article notes that “A recent study by, a nonprofit group that works for price transparency, revealed that only about 14 percent of the 1,000 hospitals it surveyed were complying with the new rule.” That’s right. Eighty-six percent of the hospitals in the US are NOT posting their prices, in violation of the law. While the language on the CMS website, “This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital”, could have (actually, as far as I know, may have) come directly out of the mouths of a conservative think tank that advocates “consumer choice” as the solution to the costs of health care, they’re not even doing that. These folks want you to shop for health care like you would shop for anything else, choosing the one that provides you the most value for the best price. This was always a completely bad (I was going to say stupid, but it could be simply malicious) idea, but when you can’t even get the prices to compare, it is completely ridiculous.

Back on March 15, 2009 (“Bargaining down the medical bills”) I wrote about an Oprah Winfrey show on which her guests were the late health economist Uwe Reinhardt and Karen Ignani, the then-head of the trade group America’s Health Insurance Plans (ACIP). At one point

Oprah asked Ms. Ignani (and I paraphrase, I don’t have the transcript): “So if I need a $200,000 procedure, why don’t you just pay it?” Flustered, Ignani said, “Well, you presume that the $200,000 is in fact what the procedure is worth; other hospitals may chart less …” – Oprah interrupted her: “I’m sick!”, she said, “I don’t have time to go shopping around to six different places to see where I can get the best deal!

I added “Unsurprisingly, the audience, made up of regular people, not pundits, applauded wildly.” But, in fact, in 2022, 13 years later, you still could not find the price for that procedure in 86% of American hospitals! Inadvertently, perhaps, Ms. Ignani points to another concern: your insurance company may refuse to pay for your procedure because you could have had it done across town (presuming you live in an area where there is more than one hospital) for less money. But, as Ms. Winfrey so succinctly put it, you weren’t in a position to comparison shop – you were sick!

The woman who was severely injured in the Boston Marathon bombing tells Mr. Schoeller that she had no idea that these surprise bills were coming, because everyone in the hospital was so nice. The fact is that none of those nice people, nurses, doctors, technicians, clerks, was being devious – they didn’t know the costs either. Mr. Schoeller says that it is not just patients, but employers, unions, even the government that cannot get the prices. And neither can staff. While most people would not buy groceries if the prices were not listed, some more well-off folks might. But only a very few would buy a car, or a house, or something else that might cost $200,000 without knowing the cost – unless it was medical care. Obviously, this hits the poor and uninsured worst, as does everything of the sort, but being insured – and even being well-insured – is not a guarantee that you will not be hit with surprise charges. And that you won’t end up like those who speak to Mr. Schoeller. One says “I just ignore the bills now,” and he asks if this might keep her from getting a loan or a credit card. “Of course,” she says. Life ruined?

So medical system IS systematically not only engaged in price gouging, but in fact hiding those prices in clear and direct violation of a federal rule that was put in place to address this problem. It is a system clearly and unequivocally built not to provide health care but to make money for the investors (in “for-profits”) and large organizations (“non-profits”) that provide the care, as well as insurance companies and drug companies and lots of large corporations, at the expense – in dollars and health – of all of us.

The same Uwe Reinhardt mentioned above, when asked why US health care was so expensive, was fond of saying (and co-wrote an article entitled) “It’s the prices, stupid!”. ‘“We depend on hospitals in our communities to take care of us,” Mr. Schoeller says, “But our hospitals are putting profits before patients.”’ He calls for there to be diligent enforcement and stronger penalties for violation of the price transparency rule.

It’s a good idea, but I call for more than forcing hospitals to post their prices. I call for those prices to be reasonable, and to require insurance companies to pay them, and for everyone to have health insurance that does. A universal national health insurance system, such as improved and expanded Medicare for All.

And the elimination of profit from the health care industry.

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