Making Hospital Charges Fair and Public

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Sarah Kliff reports that Massachusetts is trying to decide if it should put a cap on hospital charges:

In a report this past spring, the state found that some Massachusetts doctors charge six or seven times as much as their colleagues for the exact same procedures. Across the board, a three-fold variation in prices was pretty standard.

There’s a pretty simple explanation for all the price variation: hospitals negotiate specific rates for specific insurance companies….Insurers and hospitals alike closely guard those pricing agreements as proprietary information, with neither party wanting to see their pricing agreement undercut by a competitor.

Massachusetts wants to do away with all of that. In a proposal released Wednesday, the Massachusetts Special Commission on Provider Price Reform recommends allowing a panel of state regulators to reject rates charged by hospitals and providers if they’re too high….That would be a really big shift from where we are now, where price negotiations are usually a private matter between insurers and providers, and it’s nearly impossible to figure out how much a given procedure costs.

There’s another side to this too. Suppose I decided I wanted to leave Mother Jones and go write a book. Or maybe just retire because my 401(k) is in such awesome shape these days. Well, I couldn’t. Even if I had the independent income for it, no health insurer in the country would take me on. I’m a 53-year-old male with high blood pressure and high cholesterol. It’s controlled well with meds, but that doesn’t matter. I’m far too high a risk for anyone to want my business.

But couldn’t I just go without health insurance and simply pay out of pocket for medical care? In theory, yes, although I suspect my choice of doctors would be fairly limited. But here’s the thing: it would cost a fortune. If I ended up having that heart attack that my cardio symptoms say is coming someday, the resulting hospital bill wouldn’t be $50,000. Or $100,000. That’s only the bill if your insurance company pays. The list price is more like $300,000. Or maybe more. I might be able to afford the risk of a $50K hospital bill, or even a $100K hospital bill. But not a $400K hospital bill.

I’ve long considered this wildly unfair. So I’d do both less and more than Massachusetts. I wouldn’t necessarily cap hospital charges, but I would insist that hospitals charge everyone the same rate. They can negotiate whatever rate they want, and that might be quite different in rural hospitals vs. urban hospitals. But once a hospital has a rate, it’s posted publicly and that’s what everyone pays. Big insurance companies, small insurance companies, individuals, whatever.

Hopefully, of course, this will become largely moot in a couple of years. Obamacare will mostly solve all this — assuming Republicans don’t successfully repeal it — because health insurers will no longer be allowed to turn me away. I’ll still have to pay annual premiums, but I won’t have to run the risk of getting hit by a half-million dollar hospital bill. It’s one of the many market pathologies that Obamacare will address, and one that’s well worth addressing.

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Fact:

In-depth journalism that investigates the powerful takes real money and is so damn important right now.But it doesn’t take a Mother Jones investigation to know that billionaires and corporations will never fund the type of reporting (like they do politicians) we do that exists to help bring about change. Instead, our mission-driven journalism is made possible by people power, and has been for 46 years now since our founding as a non-profit.

In “TITLE TK” Monica Bauerlein writes about the perilous moment we’re in, and why it’s so important that we raise $325,000 by the time November’s midterms are decided so we can be ready to throw everything we have at the big issues facing the nation no matter what happens. Please help MoJo’s people-powered journalism with a donation today.

$400,000 to go!

payment methods

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