The problem is not that health insurance is expensive, it’s that health care is expensive. If you bring down the cost of health care, the cost of health insurance will follow. So here’s 1 way to bring healthcare costs down.
Have every provider publish their prices. Every doctor, specialist, lab, emergency room & hospital should publish their prices – just as every other business publishes their prices. You don’t buy a car (or anything) without knowing the price up front. So why do we get health care without knowing the price up front? If all the providers publish their prices, 2 things will occur….
1). Patients will begin to shop for the best price. An x-ray on Main St might cost $325 while the same X-Ray on Elm St might cost $120. So if you get your X-Ray on Elm street instead of Main St, you’ve just saved the system $205. We price shop everything else, so why not price shop healthcare? After all, it’s one of the most expensive things we pay for.
2). If consumers start price shopping their health care, It will cause the providers to become more competitive. After all, every business wants to be competitive, right? Nobody is going to patronize a business if their prices are out of whack – no matter if it’s a hospital or a hamburger stand.
But here’s the rub…. Nobody really cares if they can get an x-ray cheaper on Elm St than on Main St. Why? Because the insurance company is going to pay for it. And why would someone care if the insurance company has to pay more? So here’s part 2 of the solution…
Insurance companies should also publish their prices. But the prices the insurance companies publish show how much they would pay for any given service in any given area. For example: If the insurance company says they’ll pay $22,000 for a gall bladder surgery and you need a gall bladder surgery, here’s what would happen…
You’d shop for a provider that would perform a gall bladder surgery for $22,000 or less. If the provider charges more, you can either negotiate the price, find another provider or pay the difference out-of-pocket if you really like that provider. Isn’t that how everything else works? Why should health care be any different? If the providers publish the prices they charge for their services – and the insurance carriers publish what they’ll pay for those services, consumers will start price shopping their healthcare, the system will become more competitive and the cost of health care will come down. And when the cost of health care comes down, then the cost of health insurance will follow. And by the way, this will eliminate the need for provider networks – so every provider will be “in-network”!
Neil Steinman is the principal of Orange County Health & Life Insurance in Orange County, CA – and has been serving the needs of California residents for nearly 20 years.