NCPA - National Center for Policy Analysis

What Does Medical Care Actually Cost?

May 1, 2014

Consumers who try to understand their medical costs will find it difficult, reports MarketWatch.

A hospital bill is a confusing document, full of coded charges that are not always covered by insurance. Patients who try to shop around for care have trouble actually determining what the best deal is because pricing data is often unavailable, and what is available varies depending upon the insurance company and health care provider at issue.

Some insurance companies have tried to get this type of information to patients.

  • UnitedHealth Group offers customers a cost estimator to give them a sense of the medical costs that they could face, depending upon the hospital or medical provider.
  • A knee replacement surgery in New York, for example, could range from $28,536 to $74,010.

With the rise of high deductible plans, more patients are trying to figure out the cost variations of different health care providers.

  • When an insurance company issues its explanation of benefits form, a patient will see several different price tags for the same service.
  • A hospital's charge is generally different from the amount paid by the insurance company, which is different from the amount owed by the patient.
  • Little is understood about how a hospital sets its fees, and the rates paid by insurance companies vary widely depending upon the company.
  • The consumer is left to shoulder the rest of the costs, which is why more Americans are becoming price conscious.

Healthcare Bluebook, a startup company, has tried to enter this market. It allows people to access the rates that their insurance company has negotiated for a particular service at one health care provider versus another, and it provides patients with a "fair price" estimate for each service.

Source: Jonnelle Marte, "What Your Medical Care Really Costs," MarketWatch, April 28, 2014.


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