Pricing in healthcare (or any enterprise) is only meaningful when we know who actually pays what prices. Then we can accurately described the marketplace and begin to deal openly with the "fairness" issue. As we know, retail prices for hospitals and physicians are increasingly meaningless. Health benefit plans rarely pay a percent of charges any longer, leaving only the self-pay patient to be subject to full retail. This, of course, is behind much of the furor over some hospitals' policies to pursue self-pay patients for ludicrous balances, especially in instances "self-pay" patients are indigent (which is not always the case, by the way).
On the one hand, one can't blame providers for not having multiple retail fee schedules. They are cumbersome and costly to administer and lend themselves to regulatory and compliance problems (fraud and abuse). But too few providers have been willing to step up and openly discuss with the purchasers (not payors) of healthcare services (employers, government plans, union plans, consumers) what their costs are, and their policies for working with those unable to pay. In fact, few hospital providers know their costs and even fewer have taken a rational approach to the methodology of assessing charity care patients' ability to pay. The inconsistencies are shocking and would never be tolerated in any other business.
The evolution in managed care products and plan designs are part of the problem. The whole notion of health "insurance" to pay for healthcare "services" needs a sober look. We need to get back to the idea that insurance is only appropriate for what used to be called "major medical." It is no longer an appropriate mechanism to pay for most office-based, non-urgent, elective care under a certain dollar threshold. But it is appropriate for major, unforeseen problems or expensive chronic conditions, just as casualty coverage is meant to cover major losses to our autos and homes. A new set of expectations for who assumes the risk for doctors' visits, low tech tests and other outpatient care would gradually contribute to establishing true "value" for expensive care, and thus help set more realistic prices for this latter care.
Thomas M. Cooper
Consultant & former insurance executive
Cleveland Heights, OH