Thank god that Medicare regulates provider rates for older and disabled Americans and gives people a meaningful choice of public insurance–traditional Medicare–that covers virtually all medically reasonable and necessary care from the doctors and hospitals you want to use. Private health insurers have tremendous freedom to decide when care is needed and what you’ll pay and no obligation to disclose their policies. That’s why private health insurance is usually full of ugly surprises.
Sarah Kliff reports for the New York Times on the highly varying prices hospitals charge health insurers for the same service. Kliff’s story underscores two huge issues with health care coverage in the US for working people: People cannot choose a corporate health plan that’s right for them, since they cannot predict their out-of-pocket costs. The high and highly varying rates that health insurers negotiate with providers presumably benefit them, but add no value for their members.
Kliff’s piece, which examines the different prices different insurers pay for different services reveals once again that, in many cases, corporate health insurers are either unwilling or unable to rein in provider rates. She shows that, for example, at the University of Mississippi Medical Center, people without insurance pay $782 for a colonoscopy, about 35 percent of what someone with coverage through Aetna pays, $2,144, and almost 50 percent of what someone with coverage through Cigna pays, $1,463.
Kliff is only able to report this story now because the Trump administration mandated the disclosure of hospital negotiated provider rates. Many hospitals are not yet complying with the requirement or are burying the information so that it is extremely difficult to find. The Biden administration is threatening to penalize hospitals who are not open and transparent about their rates.
Kliff also uncovers that some people in PPOs pay higher rates for the same services than their counterparts in HMOs offered by the same insurer. The same insurer offering a PPO and an HMO product might negotiate far higher rates for the same services offered through the PPO than through the HMO. Why would that be?
People living in different states, with the same insurer, receiving the same service at the same hospital also might pay wildly different rates. At the Hospital at the University of Pennsylvania, a pregnancy test for New Jersey patients in the Blue Cross PPO is $93, while the test is $58 for New Jersey patients in the Blue Cross HMO. For the same test, patients who live in Pennsylvania pay $18. And, the hospital charges uninsured patients $10.
People with United Healthcare’s PPO pay $4,029 for an MRI at Aurora St. Luke’s in Milwaukee. People with United Healthcare’s HMO pay $1,093 for the same service. This craziness hurts patients and prevents them from being able to protect themselves financially.
If this story tells us anything is that the health care market is broken. Congress must step in to protect Americans from a totally irrational health care pricing system. The simplest way to do so is to do what every other country does, all-payer rate-setting–setting rates for all providers.
Here’s more from Just Care:
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