In what’s being hailed as an “unprecedented move” for the health care industry, three major insurance companies have agreed to publish their prices in a free online portal starting next year. Aetna, Humana, and UnitedHealthcare are participating in the new online portal, and additional insurers may end up following suit.
This is an important step designed to boost transparency in the U.S. healthcare system, which is notorious for its hard-to-access and seemingly random prices. Even experts have difficulty navigating the system. For example, in 2012, health policy reporter Martha Bebinger wrote about her experience when she tried to figure out the cost of her doctor-recommended MRI cost — and even she struggled to navigate the complicated process.
Complicating matters even more, prices for medical procedures and health care services vary widely among different hospitals for no good reason. According to a study by Change:healthcare, patients pay as much as 683% more for the same medical procedures, such as MRIs or CT scans, in the same town, depending on which doctor they choose. In some cases, prices can fluctuate by over $100,000 for the same exact type of procedure. Since consumers can’t shop around to look for the best prices — as we typically do when making a major purchase –it’s not uncommon for patients to end up getting their care at unnecessarily expensive hospitals that aren’t even delivering a better quality of care. In the end, this drives up the overall cost of health care, since hospitals aren’t being pushed to keep their prices competitive.
Last year, the Centers for Medicare and Medicaid Services (CMS) published data from 3,300 hospitals covering the costs of their 100 most common treatments and procedures in 2011. Advocates praised the move, saying it was an important step towards reducing healthcare cost growth.
Now, the three insurers who agreed to publish their prices are taking it a step further by creating an online tool for consumers. The companies are partnering with a nonprofit group, the Health Care Cost Institute, and they say the new online portal will be up and running by 2015.
“Consumers, employers and regulatory agencies will now have a single source of consistent, transparent health care information based on the most reliable data available, including actual costs, which only insurers currently have,” the executive director of the Health Care Cost Institute, David Newman, said in a statement. “Voluntarily making this information available will be of immeasurable value to consumers and other health system participants as they seek to manage the cost and quality of care.”
Experts hope that increasing transparency by making it easier to compare health services costs will discourage doctors from recommending of expensive and unnecessary tests and procedures. Likewise, patients may turn them down if they know the price tag, or if they know they can get it cheaper at another hospital.
Health care price transparency has become an increasingly important issue for the Obama administration as the Affordable Care Act is implemented. The health law contains provisions that penalize medical providers who perform too many unnecessary tests or don’t see a significant improvement in patient wellness. Some states are also working to make health care price and insurance payment data more readily available. In addition to the CMS data released last year, the administration also recently published the amount of money paid to doctors through Medicare for the first time.
The law is also designed to combat one of the major forces driving the increasing cost of health care. By extending coverage to Americans who were previously uninsured, the Affordable Care Act intends to eventually cut down on hospitals’ uncompensated care — one of the reasons experts say it’s necessary to charge such inflated prices in the first place.
Health care costs have been rising more than three times as fast as wages. Official estimates project that U.S. health spending will reach $4.7 trillion by the end of the decade – an 80 percent increase from $2.6 trillion in 2010 – underlining the need to better understand the prices of health care services to help make decisions and choices about purchasing care.
Advocates hope the new online portal will lower healthcare costs over time as consumers make more informed choices in obtaining medical care and experts study pricing trends with greater ease.
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