Last week, shoppers enjoyed Cyber Monday deals from their fingertips. With inflation at a 30-year high, savvy consumers are finding the best deals and biggest savings. Yet one sector of the economy is blocking online shopping: healthcare. In contrast to the Cyber Monday economy, where competitive prices are low and easily known, the healthcare system blinds Americans to prices then blindsides them with massive bills that arrive in the mail weeks and months after care.
Cyber shopping can come to healthcare as early as next year when hospitals and health insurers comply with price transparency rules. Both are required by law to post their actual prices so patients can shop for the best care and coverage at the best prices from the comfort of their own homes.
Because healthcare prices have been hidden, consumers, including patients, workers, employers, and unions, are routinely overcharged and erroneously or even fraudulently billed. Out-of-control healthcare costs have put around one-third of Americans in debt, and they cause roughly two-thirds to delay care each year for fear of financial ruin. Axios reports that hospitals mark up their prices by an average of seven times their cost of care. Last month, the Kaiser Family Foundation revealed that average annual employer-sponsored family healthcare premiums reached $22,221 this year.
These high coverage costs are paid from employee wages. Funds that would otherwise go to wage increases are cannibalized by runaway premiums. Hidden prices also result in wildly different bills for the same care at the same hospitals. The Wall Street Journal reports this week that prices can vary by ten times for the same services. Studies show no correlation between health prices and quality. Providers and insurers are currently financially rewarded and get to bill for their medical mistakes and inefficiencies.
Real, upfront prices published online allow patients and employers to avoid price gouging providers. Instead, they can choose high-quality, less expensive alternatives, enjoying substantial healthcare savings. Federal law already requires hospitals to post their actual prices, including their discounted cash and all negotiated rates, before care. It also requires hospitals to make them easily downloadable so that tech firms can aggregate them in search engines and create online shopping tools like Expedia, Priceline, and Kayak.
Yet a recent study by PatientRightsAdvocate.org finds that only 5.6 percent of hospitals are fully compliant. Next July, a federal law, the Transparency in Coverage rule, expands price transparency throughout the healthcare system. It requires health insurers to publish their historical claims data and secret negotiated rates so that consumers can know what they’ll owe wherever they get care and be better informed of price-performance when choosing plans. Robust and timely enforcement of these price transparency measures will allow patients, unions, and employers to lead a consumer-driven healthcare revolution.
Actual prices (not estimates) will unleash a competitive market where prices, quality, outcomes, and standards of care are known upfront. Tech innovators can publish this data in Yelp-style online consumer guides and Amazon-style online marketplaces that show quality, outcome, and price information. When real prices are easily known, consumers won’t tolerate paying ten times more for the same care. Binding prices will prevent overcharging and give consumers immediate recourse in case their bills don’t match.
Many patients are already going online to access their healthcare by using telemedicine, whose increased popularity was a silver lining of the pandemic. The obvious next step to empower consumers to lower their costs of care and coverage is shopping on online search engines and mobile apps.
Healthcare delivery can follow in the footsteps of the airline industry. Since airline prices were deregulated in 1978, competition has reduced airfares by approximately 50 percent, adjusted for inflation, made flying safer, and broadened access for hundreds of millions of Americans. Already, innovative employers throughout the country have saved 30 to 50 percent on their coverage costs by contracting with price transparent providers. They have shared these savings with their employees in the form of lower premiums and higher pay.
Systemwide price transparency will transform American healthcare by ushering in online shopping for care and coverage for everyone with a smartphone or computer. It will deliver substantial savings through competition and consumer choices — just like Cyber Monday shopping in the rest of the economy.
The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.
Cynthia A. Fisher is a life-science entrepreneur, founder and chairman of PatientRightsAdvocate.org, and founder and former CEO of ViaCord.