• Prices and the ACA

    As many of you may have heard, CMS released a ton of data today on prices. What’s it mean? What should we do about it?

    My thoughts on this and more in my latest post at the AcademyHealth blog. Go read!


    • I would be interested to know more about the actual reimbursement, as opposed to hospital charges. For example, the chart in this Washington Post article (http://www.washingtonpost.com/wp-srv/special/national/actual-cost-of-medical-care/?hpid=z1) suggests that Jackson Memorial charges less than the University of Miami, but receives substantially more in reimbursement. Any idea what accounts for that?

    • If no one is uninsured, no one will be paying these prices at all.

      Interestingly I think that it is also true that if no one was insured, no one would be paying those prices. And also true is that almost no one pays those prices now thought they are handed bills with those numbers on them.

      Looking over the numbers I got the impression that the insurance companies must like this situation because those huge bills tend to scare people into getting insurance. If everyone could get the prices that the insurance companies pay, some middle class people might decide to go without insurance (and more than half of them would be much better off for doing so). Makes the idea of a super high deductible (like $50,000 year) look like a good bet.

      • $50K is a ridiculous deductible. It’s well above the cost of the additional risk. When I renewed my non-group insurance last year, for a family of 4, the cost of a plan with a $2,500 deductible was $1,378 less than the cost of a plan with a $1,000 deductible. So, if one family member hit the $2,500 deductible ceiling, we’d have lost money, compared to $1000 out of pocket plus $1,378 in higher premiums. Moving from a $250 deductible to a $500 deductible was a decrease of $1,624: a much smaller increase in deductible for a greater decrease in premium.

        Based on this, I suspect the cost saving to the insured from moving from a $5K deductible policy to a $50K deductible is not all that great.

        I suspect of companies force $50k deductible policies on people, it might just produce a market for health insurance where the costs are capped at $50K — an insurance gap insurance.

    • Assuming that the hospital charges honestly reflect their experience with the procedures being priced, the extreme price variation seems to indicate that the procedures are relatively rare, the patient services required are very different between patients, and/or the patients insurance status and ability to pay are very different. A mix of these factors would mean that expense and income history for a procedure does not settle to a stable and predictable level.

      To ‘solve’ the problem, rare procedures should be done only in specialized hospitals. Patient variability should be reduced by assuring better pre-hospital care. Ability to pay means that patients need to be insured.

      Sounds like Obamacare to me!