Here’s a simple idea to help lower healthcare costs: Publish prices. A bipartisan group of state lawmakers in Colorado is pushing a bill to do precisely that. The Comprehensive Health Care Billing Transparency Act would allow Coloradans to see the true price of any health service they use—exams, procedures, prescriptions—before they undertake treatment.
If passed, the legislation would mandate that hospitals and other facilities disclose the base fees they charge for specific services “before applying any discounts, rebates, or other charge adjustment mechanisms.” Every bill sent to a patient would need to include an itemized list, which would allow patients to see if a service had been marked up. By making such information available up front, the legislation would reintroduce competition to Colorado’s opaque health care markets.
The bill is the brainchild of Denver businessman David Silverstein, who made news last year when he suggested that consumers stop paying their medical bills until providers show how they arrived at the prices being charged. Silverstein is the founder of BrokenHealthcare.org, a nonprofit that hopes other states will follow Colorado’s lead in legislating greater health care transparency.
As profound a change as the Colorado bill represents, all it really would do is let consumers deal with health care the way they do any other product or service. Think about it: When you want to buy a car, you shop around, comparing the quality and price of competing models and the offerings at different dealerships. The same is true for practically everything else Americans buy: refrigerators, houses, office supplies, washing machines, computers, and on and on.
Why is health care the big exception? Because the prices are obscured. Particularly if you’re covered by health insurance, you never know the true cost of treatment. There’s no incentive to shop around. This isn’t merely a fluke of the system, but a well-executed scam. Just look at the gag clauses written into pharmacy and hospital contracts, which can prevent providers from telling you that it could be cheaper to pay with cash instead of using your insurance.
Keeping prices hidden provides no benefit to the patient. It serves only to help middlemen turn a tidy profit. When you use your insurance to pay for a prescription, a pharmacy benefit manager may get a cut of the fee. Your hospital probably has a similar deal with the “group purchasing organization,” or GPO, that supplies it with everything from saline to anesthetics to antibiotics. [Source: Tom Coburn, Wall Street Journal 5/5/18]
How to make American health care great again?
A free market.
The Colorado bill rests on a basic free market principle: Customer and service provider accountability.
When you purchase gas, you know what you’re paying. When you pay for a hotel room, purchase groceries or buy a pair of shoes, you know what you’re paying.
Free and self-responsible people need and want to know what they’re paying for things. The reason we don’t know what medical care procedures and surgeries cost is because government policies have kept those facts hidden from us. Yes, as Tom Coburn wrote in his “Wall Street Journal” article, it’s a scam of epic proportions. But it’s not a conspiracy of insurance companies. It’s all a creation of the government.
Colorado’s proposal will not restore a free market in medicine. It’s not enough. But it’s a step in the right direction. For medical care to become a truly free market, we’ll have to deregulate the entire industry and eventually privatize Medicare and Medicaid, two programs on the fast track to bankruptcy anyway.
At that point, medical doctors/hospitals and patient-customers will have a great opportunity to start over. In economic terms, prices are a form of communication between sellers and buyers. In moral and psychological terms, prices are a way for responsible and thinking human beings to make reasonable and plausible decisions affecting their health and lives.
Government never should have taken that right and responsibility away from us. The single biggest way government did so is through establishing Medicare, giving federal control over the bulk of medical care in this country. Unfortunately, Medicare remains a popular program. But Medicare takes in way, way less than the federal government pays out. Ditto for Medicaid, which has gone far beyond a benefit for poor and unemployed people. These programs cannot and will not last, and America will face a health care day of reckoning when it all finally blows up.
It’s absurd and immoral that government took this capacity to make pricing decisions away from us, in the United States of America of all places. Right now in Colorado, there’s a hint of a free market trying to make its way back.
The free market is the only moral and practical solution ever devised for humans to live rationally and in peace. Nothing less will resolve health care’s continuing crisis.
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