Transparency or fig leaf?
By Steffie Woolhandler and David Himmelstein
Posted 8/29/2006 8:45 PM ET
Nearly 47 million Americans are uninsured, and millions more have coverage so skimpy that a major illness would bankrupt them. Yet President Bush apparently thinks Americans are too well-insured.
He’s pushing health savings accounts — a plan to make the sick pay thousands from their own pockets before insurance kicks in. And the fig leaf for his soak-the-sick scheme is “transparency.” Just make hospitals and doctors post their prices, he says, and the market will magically cut health costs.
The president’s scheme will drive millions more into medical poverty, but it won’t hold down costs.
Insured Americans already pay bigger co-payments and deductibles than do people in any other nation. Yet our health costs are far higher than anywhere else.
Steep out-of-pocket costs have little impact on overall spending. They discourage preventive care such as immunizations but don’t affect the real cost driver — expensive illnesses that afflict only 20% of Americans each year but account for 80% of spending.
A patient having a heart attack can’t comparison shop among hospitals, bargain for discount clot-buster drugs, or second-guess the doctor’s advice. And when steep deductibles make people delay care, the heart damage gets worse and the bill goes up.
Huge corporations like General Motors have tried for years to hold down health benefit costs by using their market muscle (and the kind of price and quality information Bush touts). They’ve failed. If GM can’t bargain down costs, will Mrs. Smith succeed?
Transparency won’t cut costs, but national health insurance would. A single-payer system could save $300 billion annually on health bureaucracy by eliminating paperwork and exorbitant CEO incomes. It could avoid the duplication of transplant facilities that raises costs and worsens quality. It would also reduce unnecessary surgery and other harmful procedures.
Most important, national health insurance would guarantee comprehensive coverage and close the health gap with Canada and other nations where people live longer than we do.
Drs. Steffie Woolhandler and David Himmelstein teach at Harvard Medical School and co-founded Physicians for a National Health Program.
Reveal health care costs
USA Today Editorial
Posted 8/29/2006 8:42 PM ET
No sensible consumers would purchase a new car or refrigerator without knowing the price, or without asking a few questions about reliability.
Yet they’ll undergo cardiac surgery or a hip replacement with little thought of the actual cost of treatment, and with virtually no information about their hospital’s track record with that procedure.
Patients who try to ask about price are unlikely to get a straight answer. “It depends” is how most hospitals will reply because they have sliding scales of fees based on a patient’s insurance, discounts negotiated by health plans, and potential complications in treatment. Bills are incomprehensible.
Unlike restaurants, hospitals don’t list prices on a menu. Perhaps it’s time they did.
Traditional insurance, whether government- or employer-based, shields patients from the true costs of care. If someone else is paying most of the bill, patients have little incentive or ability to demand lower prices. Hospitals and doctors face little pressure to publicize their fees or to lower them.
Faced with rising costs, however, employers are pushing workers to shoulder a larger share with higher premiums, deductibles and co-pays. Plans combining low premiums, high deductibles and employee-funded health savings accounts are gaining popularity. Because those plans force people to spend more of their own money, they have more incentive to shop around. But they can’t do that without better data.
The medical industry has paid lip service to transparency but has been slow to act. Allen Hubbard, director of President Bush’s National Economic Council, warned hospital executives in March that the administration would urge Congress to require better disclosure unless voluntary efforts start soon.
While hospitals and doctors are dragging their feet, the government and insurers are taking steps to make health care costs more transparent:
- Last week, Bush signed an executive order requiring four federal agencies to compile and release information about the quality and price of health care provided to people they cover.
- In June, Medicare started posting on its website how much it pays for 30 medical procedures in each of the nation’s counties, along with data on how many of the treatments each hospital performed last year. In general, the more experience a facility has with a procedure, the better the outcome for the patient, studies show.
- Aetna, which covers 30 million beneficiaries, will make physician-specific information on fees, clinical quality and efficiency available to its members in seven states.
Critics of transparency say patients can’t shop for bargains when they’re ill, it’s difficult to determine what constitutes high quality care, and it’s a diversion from doing something to help the uninsured.
True, patients on their way to the hospital in an ambulance are in no position to haggle, but most medical services aren’t emergencies. With the right tools, patients can find better values. More honesty about price and quality can lower costs and achieve better outcomes.