Consideration of US Healthcare Cost Disparity

Could transparency in healthcare pricing decrease the disparity of costs in routine procedures?

Could transparency in healthcare pricing decrease the disparity of costs in routine procedures? It’s no secret that healthcare costs in the United States are remarkably more expensive than any other country in the world. A recent N.Y. Times article attested to this notion, citing the $2.7 trillion annual healthcare bill that exists in the United States. The high cost is not the result of extraordinary services, but rather the high price of ordinary ones. Where the average cost for a colonoscopy in the US is $1185, the same procedure in Switzerland averages around $655. Likewise, a hip replacement in the US could easily be billed around $40,000, but in Spain, the operation would only average $7700 in procedure costs.

Dr Michael Collins, an internist in East Hartford, Connecticut, said that while most patients are unaware of procedure costs until they receive a bill from their insurer, doctors also often lack access to pricing before they prescribe a treatment or drug. For instance, Dr Collins said that when he called a hospital to inquire about costs for lab tests and a colonoscopy, he was unable to get a response. “It’s impossible for me to think about cost. If you go to the supermarket and there are no prices, how can you make intelligent decisions?”

In the latest study from the Centers for Medicare & Medicaid Services (CMS), findings showed that when examining hospitals nationally, costs for the same outpatient procedure varied widely from hospital to hospital. Another statement also revealed prices for the 100 most common inpatient treatment services in comparison to the prices Medicare paid for the same treatments. Jordan Rau reported that:

The differences between charges from one hospital to another were substantial. For a level 3 diagnostic and screening ultrasound, St. Joseph’s Medical Center in Stockton, CA, charged an average of $7566 — 40 times the $186 that Medicare reimbursed on average. But in Hamilton, NY, Community Memorial Hospital billed $157 on average for the same service, and Medicare reimbursed $152.

One reason for inconsistent pricing is because cost negotiations usually remain between the doctor, hospital, pharmacy, and insurer. For patients, there is sometimes a misunderstanding that the more they pay for a service, the better quality care they will receive. Additonally, the US government does not regulate or intervene in medical pricing beyond setting payment rates for programs like Medicare or Medicaid.

CMS’s findings in cost spending differences may lead Americans one step closer to transparency of what hospitals are charging for services, in comparison to what the actual procedures cost. While insurers may cover most of patients’ costs in the existing healthcare market, there are still many others who remain underinsured or uninsured. When an insurer has to bargain down supplies such as a $77 box of gauze, it may be time to consider the deeper reasons for disparity of national healthcare costs, and how to best fix those differences with healthcare reform.

Around the Web

The $2.7 Trillion Medical Bill [The NY Times]

Medicare Data Show Wide Divide In What Hospitals Bill For Outpatient Services [Kaiser Health News]

An End to Medical-Billing Secrecy? [Time Magazine]