NCPA - National Center for Policy Analysis

Health Care Pricing Still a Struggle for Consumers

April 19, 2012

Californians are still struggling to get straight answers about the cost of common medical procedures despite state efforts aimed at lifting the veil on medical pricing.  This becomes particularly crucial as more employers reduce benefits or increase employees' copay, as this gives regular consumers a growing interest in health care costs, says the Los Angeles Times.

  • Medical costs borne by U.S. employees have more than doubled since 2002 to more than $8,000 a year.
  • These increased costs are borne by consumers who are increasingly unable to pay them -- over that same period the median household income has dropped 4 percent.

The growing requirement to purchase more services with less income speaks to the need for greater price transparency among hospitals and other health care providers.

Under a California state law that took effect in 2006, hospitals must publish their average charges for the most common procedures on a state website.  However, many consumers do not know about the website, and even then the information provided is incomplete as it lacks information about additional costs (such as doctors' fees).

A brief survey of 10 hospitals conducted by the Los Angeles Times demonstrates this lack of transparency and the use of arcane principles for pricing. Posing the case of a hypothetical gallbladder surgery and asking about costs, the Times received the following responses:

  • Seven of the hospitals offered at least partial estimates, but the quoted prices ranged widely -- from $1,200 an hour for the operating room to a $8,687 facility fee.
  • None included the cost of the doctors, although California Pacific Medical Center in San Francisco did offer the total cost for hospital services.
  • One hospital, Desert Regional Medical Center, didn't return calls.
  • Another hospital said it would take 10 business days to get an estimate.
  • The final hospital required detailed insurance information before discussing prices.

A report issued earlier this year by the market research division of Thomson Reuters estimated that $36 billion could be saved annually if the 108 million Americans with employer coverage did some comparison shopping on more than 300 common medical procedures.

Source: Chad Terhune, "Health Care Pricing Still a Struggle for Consumers," Los Angeles Times, April 15, 2012.


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