As if we needed any real world examples of why allowing the free market to apply to health care decisions, the following article appears in the LA Times. Health Insurance is one of the few “markets” in which the consumer and the provider do not negotiate prices with each other. It’s as if you walked into a car dealership and said, “I’d like a new car.” But, since you don’t pay the bill (the insurance company does), the auto sales rep replies, “Great, you can have this one and your co-pay will be $1,000.”
In the auto purchase scenario, you get the car that you are given and pay the price that you are told — because you have no buying power since someone else is footing the bill… Obamacare did nothing to fix this situation, as a matter of fact, it will only make it worse by replacing insurance companies with government bureaucrats. There are few things worse than private sector bureaucrats, but government sector bureaucrats fit that bill.
A Long Beach hospital charged Jo Ann Snyder $6,707 for a CT scan of her abdomen and pelvis after colon surgery. But because she had health insurance with Blue Shield of California, her share was much less: $2,336.
Then Snyder tripped across one of the little-known secrets of healthcare: If she hadn’t used her insurance, her bill would have been even lower, just $1,054.
“I couldn’t believe it,” said Snyder, a 57-year-old hair salon manager. “I was really upset that I got charged so much and Blue Shield allowed that. You expect them to work harder for you and negotiate a better deal.”
Unknown to most consumers, many hospitals and physicians offer steep discounts for cash-paying patients regardless of income. But there’s a catch: Typically you can get the lowest price only if you don’t use your health insurance.
That disparity in pricing is coming under fire from people like Snyder, who say it’s unfair for patients who pay hefty insurance premiums and deductibles to be penalized with higher rates for treatment.
The difference in price can be stunning. Los Alamitos Medical Center, for instance, lists a CT scan of the abdomen on a state website for $4,423. Blue Shield says its negotiated rate at the hospital is about $2,400.
When The Times called for a cash price, the hospital said it was $250.
“It frustrates people because there’s no correlation between what things cost and what is charged,” said Paul Keckley, executive director of the Deloitte Center for Health Solutions, a research arm of the accounting firm. “It changes the game when healthcare’s secrets aren’t so secret.”
Snyder’s experience is hardly unique. In addition to Los Alamitos, The Times contacted seven other hospitals across Southern California, and nearly all had similar disparities between what a patient would pay through an insurer and the cash price offered for a common CT, or computed tomography, scan, which provides a more detailed image than an X-ray.
Health insurance still offers substantial value for consumers by providing preventive care at no cost and offering protection from major medical bills that could bankrupt most families.
But cash prices — typically available for hundreds of common outpatient services and tests — have a real appeal to millions of consumers who are on the hook for a growing share of their medical costs as employers and insurers cut back on coverage and push more high-deductible plans.
Some doctors are trying to spread the word about cash prices and they’re urging patients to pressure hospitals and insurers to offer a better deal.
So, when we get rid of the middle man, the consumer saves and wins. Golly, what a concept.