Strong State Transparency Laws help Consumers Find True Costs of Healthcare ServicesJune 15, 2020
Now for tens of millions of Americans, times are difficult, as they have been hit with a double blow during this pandemic. They are out of work and without health insurance, as COVID-19 has claimed millions of lives as well as jobs. Besides, bringing day-to-day life to a halt, the pandemic has prompted a lasting impact on the country’s healthcare infrastructure. During this difficult and testing time, Americans are now opting for basic budgeting principles and are cutting unnecessary costs and opting for the most economical options.
It is a fact that healthcare consumers often find difficulty in finding the cost of medical services. However, with the rising deductible limits and out-of-pocket spending, Americans need to selectively shop for healthcare services. It has been observed that few customers check prices before seeking healthcare services, opting for a treatment, or before following a doctor’s referral to a specialist. Americans are now expecting to have easy access to healthcare prices.
To have their wish fulfilled the private sector has stepped in, initially some large employers, then the major health insurance companies have come forward to give a sizeable swath of the public access to prices. Healthcare providers have posted their charges for their medical services, though these amounts generally differ from the actual prices which the customers end up paying out of pocket. This is because most of the insurance carriers negotiate a discount off to those charges.
During this current health and economic crisis, there has been a substantial increase in the number of consumers shopping, and the health insurance sector needs to be prepared. Health insurance companies should provide their health plan members with the prices that they take into account benefit design like the deductibles, co-pays, and co-insurance, but not all the plans offer price information.
To help both insured and uninsured consumers know the healthcare process, public policies can play a key role. Thus, a report card on State Transparency Laws was developed by the Catalyst for Payment Reform, along with The Source on Healthcare Price and Competition at the University of California Hastings College of Law that grades states based on the laws and consumer-accessible websites that ensure that consumers have access to healthcare price information.
As per the 2020 report card, 16 U.S. states have taken the steps to ensure that their citizens have such access. To states, Maine and New Hampshire have earned an “A”, as these two states have reached a stage that is practical and operational for consumers. The other four states are close behind with “B” grades are Colorado, Cofnnecticut, Maryland, and Massachusetts. However, the remaining 34 states do not have sufficient laws in place to manage a passing grade.
In future restatements of the report card, these organizations are going to take a more expansive look at how states are ensuring transparency in healthcare prices. These steps may include, examining laws that target surprise and balance billing along with the laws that require insurers to provide incentives to consumers shopping for healthcare. Besides, they also closely monitor laws increasing access to mandated databases “all-payer claims databases”, which combine claims data from both private and public sources to develop a comprehensive view of the value offered by different healthcare providers.
It is not only consumers who benefit from knowing the healthcare prices but the price information is of importance for employers and other healthcare purchasers and policymakers. The RAND Hospital Price Transparency Study has recently conducted research and has documented a wide variation in prices for the same healthcare services within and across markets. Consolidation among healthcare providers and provider market have led to this variation because insurers with greater market power command charge higher-than-competitive prices.
The situation and condition of healthcare provider landscape during and post COVID-19 is not clear and there will likely be more horizontal and vertical consolidation among providers because both rural and community hospitals are hit hard by COVID-19 costs and short of revenue for elective services. There has been a significant drop in-patient visits at the independent physicians, who are also struggling hard to stay afloat. No doubt, public sentiments have turned sympathetic toward healthcare providers during this pandemic, but this will also unintentionally position them to raise healthcare prices further.
By bringing transparency laws states can allow consumers to find the actual price of the healthcare services so that they can control their costs. They can also help employers to come up with more affordable health insurance options for the members, and also help policymakers to understand the time to get involved to ensure there is adequate competition. A little focus on the healthcare system will do good for the consumers and will also give them a lift to face the challenges.