B12 Solipsism

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Doctors and Price Transparency

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I currently have a high-deductible health insurance plan, but many years of my life I had zero health insurance. If you are paying costs out of pocket1, you are much more cognizant of what every suggestion by a medical practitioner really will cost you.

Hair Dr

A recent interaction with a doctor2 included this dialog3

Doctor – you need this particular procedure, and you should do it every n months.

Patient – how much does this particular procedure cost?

Doctor – I have no idea.

Amazing. No wonder American healthcare is so expensive – there is no mechanism for reducing costs. Doctors and their staff often have no clue how much a particular procedure costs, only the insurance companies do. Wouldn’t it be nice if every hospital and doctor’s office had to publish a public rate card? Without any other change in our crazy medical system, I suspect this would drive down costs a bit.

There are a few startups who are attempting to tackle this problem:

Americans comparison-shop for items as small as groceries and as big as cars. But they rarely compare prices on their health care. When a doctor recommends a test or a procedure, most patients simply go where the doctor tells them to go. Enlarge This Image

Even if a patient does want to comparison-shop, there is no easy way to obtain complete and useful information. It is a hole in the market that some companies see as an opportunity, especially because many Americans will soon have to pay more attention to what they are paying for, rather than count on insurance to cover everything.

But there has been no easy way for consumers to shop for the best deal on a colonoscopy or blood test. A start-up financed by prominent venture capitalists and the Cleveland Clinic, Castlight Health, aims to change that by building a search engine for health care prices. Patients using Castlight could search for doctors that offer a service nearby and find out how much they will charge, depending on their insurance coverage.

A few others are starting to publish health care prices, including Thomson Reuters, a Tennessee start-up called Change:healthcare, the New Hampshire government, which created a comparison shopping tool for residents, and health insurers. Aetna, for instance, has built tools to help patients estimate prices and may build more advanced tools, said Lonny Reisman, Aetna’s chief medical officer.

(click to continue reading Bringing Comparison Shopping to the Doctor’s Office – NYTimes.com.)

Several studies and pilot projects suggest that the more patients know about prices, the more money they save. A study published last month by Mercer, a human resources consulting firm, found that people on high-deductible health plans, with more exposure to the prices of doctor visits, spent less. Indiana adopted high-deductible health plans, and the average expense in 2009 for patients on one of these plans was $6,393, compared with $8,570 for patients on a more traditional health maintenance organization plan.

Footnotes:
  1. which is still the case – my insurance only will – theoretically – pay if something catastrophic happens []
  2. not my normal doctor, but a specialist []
  3. paraphrased, but pretty accurate []

Written by Seth Anderson

June 11th, 2010 at 8:27 am

Posted in health

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