Editor's Corner: A look at the 'club' argument against price transparency

Ron Shinkman

If you want to join some sort of subscription-based club or service in the United States, you're drowning in choices.

I'm neither a joiner or spendthrift. Yet I've got a Costco card. I'm enrolled in Amazon Prime. An olive pressing business in Central California regularly sends me products. There at least several other services I'm sure would come to mind if I decided to think about it a little harder.

But should healthcare be the same game? Discounts only if you're a member of the club?

That's the rationale put forth by Parkview Hospital in Indianapolis. It's under pressure to reveal its negotiated payer rates as the result of a lawsuit from Thomas Frost who was billed more than $625,000 for the care he received after he was injured in a motorcycle accident. The case was recently argued in front of the Indiana Supreme Court. Attorneys for the patient argue that reasonable costs for his care were about $246,000.

Parkview attorney Ted Storer argued the hospital should not have to reveal what its insurers pay it to render services. “We don't think a person who is not a member of the club should get the benefits of the club,” he said.

The argument, aside from what I would politely describe as audacious, brings up a very discomfiting truth about healthcare in America: Those who lack insurance are at risk of being plunged into bankruptcy if they experience an accident or an unexpected illness. In fact, medical bills are the leading cause of bankruptcy in the U.S. Even if you have insurance, you could still wind up in Chapter 11. And if you file for bankruptcy as a result of your cancer care, for example, you're actually likely to die much sooner than expected.

If Frost had been injured in California, it's more likely than not he would have been a member of the insurance club, as that state has been particularly aggressive in expanding Medicaid eligibility under the Affordable Care Act. Indiana was among the many states that decided to embrace the U.S. Supreme Court's 2012 decision that Medicaid was purely optional, so many residents of modest means had virtually no insurance options the year Frost was hurt.

Indeed, the Hoosier State only expanded Medicaid eligibility last year--through a federal waiver that requires enrollees to cover some premiums and co-payments. Club dues, I guess.

Of course, there are some clubs where enrollment is automatic, like Medicare when you turn 65. Had Frost decided to embrace motorcycle riding as part of his retirement plans, he likely wouldn't be litigating his case today. Medicare's club bylaws are also quite transparent; what Parkview charges the Medicare program and what it is paid in return is public information.

The fact of the matter is, the club argument is intended to keep prices and payments secret from consumers so they cannot effectively shop on price, even as private insurers continue to heap higher co-payments, deductibles and premiums on their shoulders. By extension, the club argument is being used to keep the U.S. from the single-payer system that defines virtually every mode of healthcare delivery in the developed world. These arguments benefit bottom lines and institutions without balancing the concerns of patients and their long-term outlook and enjoyment of life.

We've had a rocky relationship with clubs over the years, from the men's-only structure to the lifetime dance studio contracts to the LP records that never stop and are not returnable. In most instances, those onerous examples were eliminated due to litigation. I can only hope that Thomas Frost prevails in his case--and that more lawsuits to crack open the nation's healthcare price opacity continue. – Ron (@FierceHealth)