Guest Post: A Blueprint for an Out of Control Cost Structure

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By Consumers Union on Wednesday, May 21st, 2014

Guest post by Roland Garton

Consumers Union collected stories on the many problems consumers face with the cost of healthcare. This guest blog comes from one of the hundreds of story sharers that wrote to us. 

How does one find out the cost of a medical procedure without actually having it performed? Short answer: you can’t.

By way of background, I have a high-deductible insurance plan, which means I pay pretty much all my low-to-mid-level medical costs with my own money.  That’s fine; I like this plan; and as a result, I’d like to know what a test or procedure will cost before I have it done.  This, as it turns out, is a highly contrary notion.

The doctor who prescribes a test or procedure cannot tell you what it will cost.  The hospital, which will eventually bill you for numerous related (you hope) and mysteriously coded costs, does not want you to know this apparently sensitive cost information.

I discovered this recently after a doctor had recommended a laser eye procedure in the unlikely case I got glaucoma, resulting in too much eye pressure.  He could not tell me the cost.  “You’ll have to ask the hospital,” he said.   A well-rehearsed, friendly hospital functionary responded to my request for the cost of the procedure by saying, “We cannot possibly tell you actual costs.  You’ll have to talk to the insurance company.”

It turns out that the insurance company also wants to protect the dark secret.  Their equally friendly minion told me, “We cannot possibly tell you that cost.  You’ll have to talk to the hospital.”  In the end I consulted a third eye expert, an independent ophthalmologist with no allegiance to either of the two hospitals in town.  He thought the risk was too low to warrant the procedure, as long as I had regular eye exams.  I elected to forego the operation.

Here’s another telling anecdote, another true story:  A family doctor had recommended a sleep test to me—maybe the cause of low energy, though a remote possibility.  When I asked how much the test cost, he said “I have no idea.”  So I called the sleep-testing hospital and was quoted a price of $5,000.  “Wow,” I said, “that’s a lot of money!”  Was it worth this much?  I called back the family doctor for his input.  “Wow,” he said, “that’s a lot of money!”  He then decided the sleep test was probably not worth $5,000.  But without any notion of the cost, he had recommended the procedure.  And who would question a doctor, especially the multitudes whose insurance pays the bulk of the bill?

So, those who make medical decisions are effectively dissociated from the costs of those decisions—a blueprint for an out-of-control cost structure. 

In 2012, U.S. healthcare costs as a percentage of GDP were 17.2% as compared to an average of 9.3% for other developed countries. And here, stateside, our legislators pontificate about who’s supposed to pay these bone-crushing costs, instead of wondering why they are so danged heavy to begin with.

We should make sure that prices are known up-front, and get doctors and patients more involved in weighing potential outcomes versus costs and knowledgeably comparing various options. This would make a lot of sense from the perspective of human behavior.

But in the meantime, providing meaningful financial information to the paying medical consumer does not seem to be at the top of anyone’s bucket list.

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