Consumer Reports: Providers' bargaining power drives insurance prices

An article in the most recent issue of Consumer Reports verifies what America's Health Insurance Plans (AHIP) has been saying for years now--providers are at the root of the healthcare cost problem.

Based on research of prices charged by insurers like UnitedHealth, Aetna, Cigna and Blue Cross Blue Shield plans, Consumer Reports concluded that insurers set prices for services based on providers' bargaining power in each market. The prices have nothing to do with quality of care provided.

"What we found was there's no such thing as a price for a healthcare service," Nancy Metcalf, Consumer Reports senior program editor and author of the article, told CNN's The Chart blog. For example, colonoscopy costs can range as much as $840 at a doctor's office to $4,481 at a medical center, Consumer Reports found.

What's more, insurers don't typically disclose their prices. "It's like a trade secret," Metcalf said. "If you're an insurance company, you don't want providers knowing what deals you made with other providers. They have really held this information very close to the vest. The market negotiation has nothing to do with patients; it's a negotiation between providers and insurance companies."

AHIP spokesman Robert Zirkelbach told The Chart that this price variation is one of the underlying problems with medical care. "The healthcare reform debate discussion focused almost entirely on the premiums and largely ignored the high prices that are being charged for medical services," he said. "We need to shine a spotlight on these prices so that we can have a discussion on how best to address this issue. There is a lot of data showing that increasing provider consolidation has resulted in significantly higher prices for services."

To learn more:
- read the Consumer Reports article
- see the CNN's The Chart blog post

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