Monday, August 22, 2011

A Student's Summer Reflections on Price Transparency

Jeffrey Herman is a sophomore at Brandeis University and just completed a summer internship with Costs of Care.

I can’t think of a single industry that is more inherently personal—more emotional than health care.

Everyone has a story of how the health care system has impacted their lives. My family’s experience with the healthcare system had both positive and negative results. Thankfully, my brother survived a brain tumor as a young child and my father’s heart disease was treated early enough to prevent a heart attack. However, the bills for these procedures were astonishing. Perhaps even more shocking was the complete inability of doctors and insurance companies to give an accurate estimate of what the procedures would cost. There was no more clarity with routine follow-up procedures like MRIs and stress tests. On any given day, a doctor may order the same test several times, so how does uncertainty exist about how much it costs? And if doctors don’t know the cost, how are patients supposed to be informed consumers of health care?

Many insured patients don’t worry about how much a procedure costs—frankly, with third-party payers, they often don’t have to. In fact, if you are sick and diagnostic tests are covered, you might push for your doctor to administer all potentially beneficial services. However, at some point the over-utilization of services at unclear prices results in detrimental care that is ultimately more costly than helpful. In some cases, particularly for patients with high deductibles or loop holes in their insurance plans, these costs may even cause significant financial harm.

When policymakers and doctors try to arbitrate solutions to the problem of price transparency, progress often can seem out of reach. Most avenues to change are either politically unpalatable or financially impractical. So instead, I propose addressing the problem from a grassroots level. To fix the American health care system as a whole we must engage consumers and doctors to care about it on a personal level. Informed consumers will push for efficient stewardship of resources and doctors will oblige if there are the right incentives to do so.

Several websites, such as Clear Health Costs and HealthCare Bluebook, provide easily accessible information about the price of various procedures. Clear Health Costs even breaks down prices by specific physicians/hospitals. If it is so easy to find reasonably priced care, patients will be more inclined to be cost-effective consumers. Additionally, such websites could exert competitive pressure on caregivers to both have reasonable prices and to be knowledgeable of what their services cost. Assuming that these websites will expand and spark similar sites, they will become an invaluable resource for health care consumers and caregivers.

The widespread use of social media also has significant potential to provide cost information to consumers. Eventually, Twitter and Facebook users may be able to access price information while connecting with friends, family, and other aquaintances. This convergence of health care information with personal networks promotes knowledgeable consumers. Perhaps more importantly, if these health care cost-consciousness permeates social media, users will feel social pressure to spend resources wisely. Imagine 750 million Facebook users with a price transparency application that appears in a newsfeed right along with friends’ status updates and wall posts.

After reflecting upon the state of the American health care system, it can be difficult not to feel optimistic. Party politics seem to overshadow progressive policies. Any potentially beneficial policy or idea is immediately rejected because it will be politically inflammatory or financially taxing. However everyone—on all ends of the political spectrum—can agree that change is necessary. Perhaps a grassroots approach that engages the public in cost-effective care with greater price transparency will bring about much needed reform. Providers and lawmakers will take notice if the public pressure is great enough. Ultimately, it is up to us.

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