Tuesday, December 20, 2011

Medical Costs

We are all aware that medical care is expensive as is health insurance. But do any of us really understand why? That I am not so sure about. There are some things I do understand - doctors and other medical professionals are highly educated and trained and deserve a decent salary in return; insurance companies, hospitals, and medical centers are businesses and are trying to run in the black as opposed to the red; medications range from really cheap to phenomenally expensive; medical equipment can be very expensive; and the list goes on.

Here are two ideas where I think the idea is right but I am not so sure the execution is. In the first idea patients are rewarded for choosing lower cost medical care. They have access to a medical concierge who directs them to cheaper care for tests such as mammograms and colonoscopies and are rewarded with a check from their insurance company. Shouldn't that reward actually lower their insurance premiums? Also doctors are concerned that they are referring patients to a place where they are comfortable with the quality of care so once again are insurance companies making medical decisions solely based on their wallets? And if the savings is $1700 for a colonoscopy shouldn't the patient's reward be substantially greater than the $10-$75 quoted?

In the second idea, Medicare reimburses doctors per each patient not for each procedure. Doctors are then rewarded for staying under budget and penalized for going over. Again insurance companies are making medical decisions based on their bottom lines.

In a free market economy (as I recall from those days in my deep dark past of economic classes in college) is based on supply and demand. So where is the price list so that people can shop around? There isn't one. Prices are set through secret negotiations between insurance companies and medical service providers - and range substantially. Patients aren't concerned with prices because their insurance covers it and they don't get to see the price so they can care anyway. Also insurance premiums are negotiated between employers/blocks of employers and their insurance companies. Rates are negotiated based on desired rate increases on the part of the insurance companies vs. changes in co-payments and covered items on the part of employers and patients.

I am going out on a limb here and if anyone likes this idea and can make any of these changes, feel free to act on them. What if hospitals and insurance companies were transparent when it came to sharing pricing? What if you got a price list that told you how much the same test/procedure/medical adventure would cost at different places and you also got to see a review of the quality of care? Then you could make an educated decision on the care you were receiving and what it cost?

1 comment:

leah said...

Caroline,
I had a choice of this type of plan (called cost-sharing) when I picked the company's plan for Tom. I was amazed at the differences in prices for a procedure even among 3 of the local hospitals in Western MA. My insurance broker talked me out of these types of plans since the savings was miniscule.
Something is wrong in the exectuiotn as you say...