The Cost of Your Health Riiiiiiiing. Johnny waits for his call to be transferred as the long ring is replaced with familiar elevator music. Minutes later, an automated voice tells him that the person he is looking for will be out of the office for the next few days. Johnny is a Dad-to-be who is preparing for his child’s arrival. He is curious as to how much the cost of his child’s birth would be.
After two weeks and thirty endless phone calls, he finally gets a number from the price consultant at the hospital where his wife is giving birth. The price consultant tells Johnny that he will have to pay about $347 after negotiation and coverage by his insurance. When he asked about the specific costs, the price consultant failed to provide any further details. Frustrated by his unavailing ordeal, Johnny shared details of his experience on YouTube where his video gained widespread attention and positive support from viewers (Harris). With such a common procedure such as childbirth, you would think that the overall estimated cost would be easily accessible to families. However, like many other medical procedures and services, their prices are not listed by hospitals.
Even if these prices were available, information pertaining to medical costs are often difficult to obtain and understand as seen in Johnny’s case. Many Americans do not realize they are in the dark when it comes to costs related to their health. Patients have no way of knowing or estimating the costs of their treatment and are only able to after they have received it.
The lack of transparency in healthcare costs negatively affects Americans as it contributes to patient financial hardship, creates inefficiency, and elevates overall medical costs. Unavailable prices for medical procedures, services, and treatments affects many patients financially. With current disproportionate healthcare costs, many patients experience financial hardship after receiving treatment as they realize they cannot afford to pay their medical bills.
Even with health insurance, many Americans are quietly drowning in medical debt. This issue is especially prevalent among patients receiving cancer treatments. In a study published in JAMA Oncology, the price for one month of an oral-cancer medication was found to have increased from $1,869 in 2000 to $11,325 in 2014, which makes the medication cost even more now (Olen, par. 18).
With rising medical costs, current cancer treatments amount to about $30,000 to $50,000 annually, making it hard for patients to afford necessary life-saving treatments (Olen, par. 18). With more transparent pricing, patients will be able to plan ahead and budget accordingly to avoid financial burden from unexpected charges. When patients know the costs, they can have well-informed, important conversations with their physicians to explore better and less expensive options. Transparency in pricing will also help reduce the amount of uncompensated care which negatively affects taxpayers and causes the closing of many rural hospitals. According to TransUnion, a company that assists hospitals in collecting unpaid bills, over two-thirds of patients did not pay their entire bills in 2016 and that fraction is expected to increase to 95 percent by 2020 (LaVito, par. 1).
This is most likely attributed to the increase of patient responsibility and higher deductibles in recent years. This emphasizes the need for transparent pricing as people could make better financial decisions if they knew how much treatments cost before receiving them. Studies have shown people are more likely to pay their bills when given accurate price estimates in advance (Livingston, par. 27). In addition, crucial hospitals in rural areas experiencing medical shortages are affected as people’s inability to pay forces these hospitals to shut down. Improving access to prices before treatments are initiated will help identify patients at risk for financial difficulty (Henriksen and Shankaran 2). Moreover, having the knowledge of prices beforehand can help establish more sources of financial aid as seeing actual costs draw attention to unreasonably expensive prices. This makes it easier to fundraise and increase support for charitable foundations.
Not only does pricing have a personal effect on patients but on the overall efficiency of the healthcare system as well. Transparency of pricing can improve the efficiency and quality in delivering care to patients. Giving patients the option to see prices help limit unnecessary procedures, overuse of emergency rooms, and use of overqualified providers. As more and more physicians practice defensive medicine, the more unnecessary procedures and tests are ordered for patients. Knowing prices will enable patients to assess their options more carefully as they choose to undergo only treatments that are truly necessary. As a result, less time will be wasted and there will be more room in hospitals for others. Transparent prices will also help patients avoid utilizing overqualified providers as listed prices will direct people toward cheaper options offering the same treatment (Limbacher, 951).
For example, when ailments are not too severe, it is a better idea to receive health services from a nurse practitioner instead of a doctor. Related to this issue is the overuse of emergency rooms. A visit to the emergency room not only costs thousands of dollars but also contributes to hospital inefficiency as many people often show up to the emergency room for minor issues. Typically, they can receive the same services at urgent care centers where prices are more affordable (Friedman et al. 145). Furthermore, transparent pricing will allow for more shared decision making between patients and physicians (Friedman 136).
Patients often rely on physicians to help them make important health decisions. However, a recent study in the Journal of the American Osteopathic Association showed that more than half of emergency room physicians and nurses did not know the cost of common medical services (Livingston 27). If physicians themselves do not know the costs of the services they are suggesting or providing, how can they determine what is best for their patients? With prices made available, physicians and patients will be able to collaborate to choose the most cost-effective treatments and improve overall outcomes.
For example, physicians may refer patients to facilities offering lower costs and better quality. As a result, there will be lowered readmission rates and visits to the emergency room (Livingston 32). With the knowledge of different prices, people can compare and determine what is best for their health and at the same time, improve efficiency. Efficiency is crucial as there are already so many healthcare issues such as excessive administrative duties that cut down doctor visit times and physician shortages in places where there are significant health disparities. The lack of transparency contributes to rising medical costs as it drives price variation and makes it easier for providers to take advantage of consumers.When it comes to making decisions about when and where to seek medical services, consumers have little to no consideration on prices (Limbacher, 949). This is largely due to non transparent costs which fuel price variation as different hospitals charge drastically different prices for the same treatment (Friedman, 127). For example, the average cost for a knee replacement in South Carolina is about $47,000, while the average cost for the same procedure in New Jersey is only $24,000 (Herman par.
6). With no plausible reasoning for the widespread variation in hospital costs, patients are subjected to unfair circumstances as these prices are not disclosed publicly beforehand. Nontransparent pricing also leads to inelastic demand which allows providers to arbitrarily hike up prices as they know consumers will pay for treatments no matter how absurd the costs become (Limbacher, 950). By listing prices of medical tests, procedures, and other treatments, it will encourage competition among providers and ultimately bring down costs. More transparency needs to be established to fight corrupt providers and unfair prices. Some may argue that knowing the price of medical services will hinder people from getting necessary medical treatment and shift the focus of medicine from caring for others’ health to cold business.
With access to costs before treatment, people may choose to forgo medical care as knowing costs may influence people to avoid doctor visits and important tests. Ignoring medical advice will eventually hurt us in the long run as people’s health conditions decline, leading to higher healthcare costs. However, people need to understand the harsh reality of our current healthcare system. We are not only patients but consumers as well. Moreover, it is the patient’s personal choice whether they choose to undergo treatment or not.
With or without the knowledge of prices beforehand, patients will have to pay the costs if they deem the treatment necessary. The difference is that knowing the price before treatment allows consumers to make the best decisions as they are able to consider all the information. At the end of the day, America’s healthcare system is a market. Imagine purchasing goods from a grocery store without prices and discovering the costs only after it is charged on your credit card. This notion is both impractical and unreasonable. Therefore, like any other market, it is only fair that prices for healthcare be made available to the public. Why is it that in healthcare, consumers are always “along for the ride” as they receive services first and learn prices after? ?To drive change, patients need to understand healthcare as a marketplace and be more proactive as consumers. Returning to Johnny’s story, a couple weeks later, Johnny’s wife gives birth to a healthy baby boy.
The hospital total was $16,848 and the insurance negotiated price was $8,348. The final amount that was billed to the couple was $841, which is about $500 more than the initial estimate that was given to them. For a moment, Johnny forgets about the costs as he holds his baby boy (Harris). Often times with medicine, people envision an ideal image of philanthropic hospitals with heroic doctors and free services. It is a place of hope where new lives are born and countless lives are saved each day. Sadly, that image is masked by the accumulation of medical bills and the declining of quality medical care.
With expensive medical costs, inefficiency, and patient financial burden, the lack of price transparency sheds light on the problems within the American healthcare system. Although making medical costs transparent won’t fix all the issues of our healthcare system, it is a small but effective step in helping patients financially and improving the quality of their lives. With America’s healthcare system becoming more capitalist, consumers deserve the right to know the cost of things to be able to make well informed decisions about their health. Price transparency enforces others to think more about their health as they consider what treatments are necessary through price comparison and shared decision making. In addition, it encourages people to take charge of their own health as price information encourages people to practice more preventative health such as making healthy lifestyle changes to avoid the need for medical care altogether. Hopefully, when Johnny’s little boy is older, he will have access to healthcare that both values him as a patient and respects him as a consumer.