Never has it been more necessary for transparency across our health institutions.
From gag clauses written into pharmacy and hospital contracts keeping providers from revealing cash discounts, to the private negotiations between providers and insurers establishing medical service and procedure prices, to the complicated system of drug rebates and discounts negotiated by PBMs behind an opaque curtain, we have no idea what the actual cost of services, procedures, and prescription drugs are.
But, we do know that we are paying more for healthcare. And unlike every other consumer experience in the U.S., patients typically don’t know how much they are going to pay until after visiting the doctor, having a procedure, or picking up their prescription.
There are no regulations on what hospitals or providers can bill for services, on what pharmaceutical manufacturers can charge for their newest product, or what percentage of rebates PBMs can rake in. Nor is there alignment of fiduciary responsibility.
On the other hand, the federal government has regulated the price it will pay to doctors and hospitals for specific services and in some cases, the treatment of specific conditions. But these price controls don’t spill over into employer-sponsored insurance. Instead, they serve as a baseline for negotiated multipliers.
The average for-profit hospital charges more than seven times what Medicare will pay for services; nonprofits charge five and a half times as much. After traditional discounts, employers typically wind up paying three times what Medicare would pay for the same service.
Why is this? Why are employers paying multiples of what the country’s largest payer is shelling out for health care? Why are insurance companies negotiating for and settling on these inflated rates? Furthermore, why are PBMs acquisition costs kept secret? Why are they focused on higher rebates instead of lower base fees? And where in all of this are the patient’s best interests? Where are the efforts to lower the cost of health care?
The answers to these questions are lost in the veiled transparency of our system, which is the reason we must continue to ask them.
More expensive does not necessarily mean better in U.S. healthcare, it just means more expensive. We pay substantially higher prices for services, diagnostic tests, hospitalization, and prescription drugs than do other developed nations and we spend far more comparatively on administrative costs because of our complex payment system.
It’s time we start looking more closely at what we’re actually buying with our healthcare dollars. To do that, we must demand transparency across our healthcare institutions.