Sometime after my employer switched to a high-deductible health insurance plan, I got an injury that required physical therapy. My doctor referred me to a local sports medicine facility for treatment.
When I stepped up to the receptionist’s desk, I asked, “How much will these visits cost?”
She said, “Oh, we don’t have any idea of that. We bill the insurance, and then they tell us what we can charge you, and what they’ll pay.”
I said, “Well, what do you bill the insurance?”
She said, “I can’t tell you that. There are so many different insurances out there, and we have different contracts with all of them, so it all depends. We have a department that handles that.”
My employer was the largest in town. So I said, “Well, do you have any guess at all what the charges ended up being for [name of insurance company]? I have a high-deductible plan, so I need to know what I’m going to be paying.”
She shook her head. “No idea. You’ll get the bill in 90 days.”
At my initial visit, a physical therapist gave me a series of exercises. At all the other visits, they watched me do the exercises. That was it.
This had been going on 2-3 times a week for several weeks, when I finally got the first explanation of benefits from my insurance company. That’s when I discovered that this place was charging me nearly $500 per session. My insurance company had a price-fixing arrangement with them, but I still had to pay about $1400 for these visits.
And the problem wasn’t fixed.
I cancelled all my other appointments, saw a specialist, and was referred to a different physical therapist. I asked him what he would charge. He said he’d send my insurance company a bill for $75, but that the insurance company likely would only allow him to charge me $50. After two months of visits, and a total cost of less than $300, the problem was fixed.
My experience revealed two demons of the health-care industry: concealed prices, and secret price-fixing agreements.
Fix #1: Require clear prices.
The first way to fix health care is to make doctors tell the truth about what they charge. We need a law that says this: “All medical practitioners and facilities shall disclose the full cost of any service, procedure, or treatment provided by them. This disclosure shall be by a public website posting of a searchable document listing each procedure’s common name and the total price for that procedure. Further, before any patient receives treatment, the medical practitioner shall disclose, before treatment begins, the full cost of that procedure or course of treatment to the patient. If the full cost is unknown, then the practitioner must estimate the number of visits and procedures required to fix the problem, disclose the full cost of each visit and each procedure, and estimate the full cost of the entire course of treatment. A medical practitioner who provides treatment without disclosing the full cost of the treatment may not charge a patient or insurance company for the cost of that treatment.”
That means that long before you have pain in your left arm, you can compare which hospital charges less to treat an emergency room “heart attack” or a provide a “quadruple bypass surgery.” When your eye doctor says, “Well, I think it’s nothing, but let me send you to a specialist just in case,” you’ll know ahead of time that you’ll be paying $750 for your eye doctor to provide a little CYA for himself. And when your primary care doctor orders lab tests, you can decide whether to have them done at the lab that charges $20 for the test, or the lab that charges $375 for the exact same test.
Unless, of course, your doctor has a special agreement to only deal with one particular lab, which happens to charge really high rates. Which brings us to the second fix:
Fix #2: Make regular anti-trust laws apply to medical care.
Seems obvious. The anti-trust laws have been around since the late 1800’s and early 1900’s, and they apply to all businesses, right?
Health care has a huge exception. That’s why hospitals get to carve up areas and agree not to compete for patients in each others’ territory. That’s why insurance companies fix costs at one level for some people and at another level for others. That’s why doctors give a high bill to middle-class, uninsured people, and a lower bill to insured people, for the same service. It’s price fixing, it’s non-competition agreements, it’s restraint of trade, it’s monopolies of specialties.
And it’s definitely driven up costs.
This is a super-easy fix. Just delete the exception. See a law that says this stuff is okay? Repeal it.
Opponents will cry: “No! If you have competition, you’ll drive up costs! Insurance rates will sky-rocket!” But that’s stupid, because costs and insurance rates have already sky-rocketed without an open market (duh, what did you think would happen?). Insurance rates won’t sky-rocket, because truth pricing and free competition will drive down the costs of health care.
Speaking of insurance…
But that’s a blog for another day.