Summary: Watching cash prices in health care, as we have for the past five years, we have noticed a few trends. Here’s one: cash prices vary across a fairly narrow band, in most cases, for most things. Another: More and more providers are quickly able to quote cash prices than were able to do so when we started doing this in 2011. Yet another thing: Prices charged by providers to insurers and others can vary a lot, and prices paid by insurers to providers can also vary a lot. And finally: the intermediation of the insurance system (a third-party payer) can really affect what you’re charged and what you’ll pay.
Summary: “Six years after President Obama signed the Affordable Care Act, the health reform law has gained acceptance from a majority of California voters, but the cost of getting healthcare remains a major concern, eclipsing worries about having insurance, according to a new USC Dornsife/Los Angeles Times poll,” David Lauter writes in The Los Angeles Times. “The widespread worry about costs indicates a potential shift in the debate over healthcare, at least in this heavily Democratic state. … Cost concerns were most widespread among those in their 50s and early 60s. Indeed, that age group consistently showed the highest levels of anxiety on a series of healthcare concerns. By contrast, those over age 65, most of whom are covered by Medicare, were the least likely to express worry about healthcare issues. … Just over half of those surveyed said they believed that costs for average Americans have ‘gone up a lot’ because of the law, compared with roughly one-third who said that the law had not caused that to happen.” David Lauter, “California voters are becoming more concerned about healthcare costs than about whether they have insurance,” The Los Angeles Times.
Summary: How much does a brain MRI cost? Well, $250 or $1,850 — or $8,000. “Had a problem with high deductible insurance. I decided not to deal with the insurance and just pay out of my HSA. The bill said my balance was $1850.00, however it also had a handwritten amount of $250.00. Not sure why the discrepancy happened, but the price I paid was $250.00,” said the note on the PriceCheck contribution in our Florida partnership. So I reached out to the contributor to ask about her $250 brain MRI.
Summary: Princeton economist Uwe Reinhardt writes about value shifting in health care in the current issue of Health Affairs. The money quote, for me: “My gratuitous advice to the drug industry, and to the health care industry in general, is to be very mindful of the distinction between value creation and value shifting in their pricing policies, lest they eventually invoke the wrath of the losers in that game, with dire consequences. A healthy addition to corporate board meetings at these companies, for example, might be a presentation on the distribution of family income in the United States, whose median now is around $52,000 (meaning 50 percent of American families have a lower family income). Similarly, the boards should know more about the health insurance status of the American people, including the ever-increasing deductibles and coinsurance families are made to bear. These data might give boards some feel for how much money can reasonably and humanely be extracted from their fellow Americans, especially those in the bottom half of the income distribution, with whom the boards and business executives have lost touch.” Uwe Reinhardt, ‘Value Creation’ And ‘Value Shifting’ In Health Care, Health Affairs.
Summary: Men and women in the United States think very differently about health care costs. When I talk about the topic, it’s common for me to see half of my listeners zoning out — the male half. Why? Well, because women make or influence 90 percent of the health care decisions in this country, according to a study by the American Academy of Family Physicians. Of course, men go to the doctor. But they make fewer health care decisions, and they don’t think about pricing the same way women do.
Summary: “Doctors, along with all other heath care providers, virtually always bill insurance companies far more than what we would expect in payments. Why? The simple answer is that we usually don’t know what to expect,” writes Dr. David Belk, a California internist who researches health costs. “Insurance companies will always pay what ever a medical provider bills up to the maximum amount they’re willing to pay for any service. So, if a doctor bills $100 for an office visit, and the insurance company is willing to pay $75, the doctor will get $75. If the doctor bills only $60 for that office visit then $60 is all he’ll receive. There is absolutely no penalty in health care for over billing, but any medical provider who under bills will short change themselves. This is why billing charges have exploded by so much in health care. This payment system is far too confusing for any health care provider to really understand, so the best strategy is to bill high for every service then take what they give us. This creates a huge problem for anyone who is uninsured, but an even bigger problem for people who have insurance and had their claim denied for any reason. The uninsured will be forced to negotiate on their own behalf against billing charges that might be many times the value of a medical service. This puts the uninsured at a severe disadvantage. A person who uses their insurance, but has their claim denied is almost always expected to pay the full bill, though.” Other highlights: Blue Shield of California (and other insurers) undercuts Medicare; doctors don’t negotiate with insurers; HMO’s actually pay a lot to some providers. David Belk, “Office Billing,” True Cost of Health Care.
Summary: Very, very narrow networks are rising in popularity. These often seem to be formed by an incumbent insurance company (think Aetna or UnitedHealthcare) with a local health care system. This is an interesting phenomenon, especially given the statements by UnitedHealthcare that it’s not making enough money on the health insurance plans under the Affordable Care Act — and so is planning to pull out of some markets. At the same time, though, UHC is launching these smaller, narrower products in several markets. Another question raised by these small networks: What happens when the provider and the insurer are under the same roof, and the patient’s on the outside?
Summary: A friend writes: “Our latest RX story. I can’t tell you the [pharmacy benefit manager], but here are the facts: [My husband] needs Crestor refilled. Calls in to drug store chain that has filled it for 20 yrs. they say he has to have generic. He says no, you have ‘fill name brand’ from doc. They say ‘expired.’
2. Meantime they send a ‘we are filling the 90 day Rx and mailing it to your address’ — where we haven’t lived for 4 years
3. He calls our local store. Yes, they have the order from doc, it’s ‘$131.00′
4. No, says [my husband], I have a coupon on your file; they say, ‘oh, you have to tell us that before you fill it’
5. He says, give me corporate.
6. They say, ‘you are right Mr [xxx], no need for you to call. And we don’t know why they were going to mail your drug, and we have the right address, and you always pick it up at this store in [town]’
7. He picks it up, they say, ‘Thank you, Mr [xxx], here’s your $3.00 prescription for Crestor’
And you think this is a ‘system of care??’ Ha. It’s set up like this on purpose.”
Summary: “The Milliman Medical Index (MMI) was released earlier today, and like every year since 2001, the index was up,” Dan Munro wrote in Forbes. “This year’s MMI — which calculates the total cost of employer-sponsored PPO coverage for an average American family of four — is $25,826. That’s the total average cost for employer-sponsored coverage, but the MMI is further divided into two core components: the individual employee expense and the employer portion. This year’s employee expense–which includes premium contributions (typically through payroll) plus out-of-pocket expenses–combined to equal $11,033. In lockstep with the MMI generally, the employee portion has continued its upward climb as well.” Dan Munro, “Annual Healthcare Cost For Family Of Four Now At $25,826,” Forbes.
Summary: “Rising cost-sharing for people with health insurance has drawn a good deal of public attention in recent years,” Gary Claxton, Larry Levitt and Michelle Long wrote in the Peterson-Kaiser Health System Tracker. “For example, the average deductible for people with employer-provided health coverage rose from $303 to $1,077 between 2006 and 2015. While we can get a sense of employees’ potential exposure to out-of-pocket costs by looking at trends in deductibles, many employees will never reach their deductibles and other employees may have costs that far exceed their deductibles. In addition to deductible payments, some employees also have copayments (set dollar amounts for a given service) or coinsurance payments (a percentage of the allowed amount for the service). To look at what workers and their families actually spend out-of-pocket for services covered by their employer-sponsored plan, we analyzed a sample of health benefit claims from the Truven MarketScan Commercial Claims and Encounters Database to calculate the average amounts paid toward deductibles, copayments and coinsurance. We find that, between 2004 and 2014, average payments for deductibles and coinsurance rose considerably faster than the overall cost for covered benefits, while the average payments for copayments fell. As can be seen in the chart below, over this time period, patient cost-sharing rose substantially faster than payments for care by health plans as insurance coverage became a little less generous.” Gary Claxton, Larry Levitt and Michelle Long, Payments for cost sharing increasing rapidly over time,” Peterson-Kaiser Health System Tracker.