Originally published by Cleveland.com
In almost every industry in the United States, consumers are able to easily access price information to shop. The first requirement to bring buyers and sellers together in a market is to agree on what will be paid for goods or services.
For those of us who have studied even the most basic economic theory — or those who have casually observed dealings between the masses of buyers and sellers — we know that when the price of a product or service is lowered, normal consumer behavior increases the number of people who are willing to make that purchase. This is called “price elasticity.
There is one glaring exception to this rule:the sale of goods and services in our nation’s healthcare system. Why do we accept the concept that it’s OK that we have no idea what the costs will be until afterwe have received the service? As a result, there is no price elasticity that would normally reward vendors who don’t overcharge and reward innovators that reduce costs while improving quality.
Many believe there’s no fix without healthcare price legislation, and recently we have seen some regulations passed and additional measures discussed by our political leaders. But Americans already get consumer-based pricing models in nearly every other industry, and shopping comes naturally to most of us.
So why would anyone wait for the passage of special price transparency regulations before requiring their medical suppliers to support a normal shopping experience? It’s the ongoing rhetoric between suppliers, legislators and payers — created by the combination of the quasi-regulated environment of healthcare with a third-party, indirect, payer system — that continues to interfere with normal market dynamics.
According to The Peterson Center on Healthcare, U.S. residents paid more than $352 billion in out-of-pocket healthcare costs — along with another $3 trillion in healthcare premiums and taxes — to pay for government healthcare programs last year. This represents a staggering 10 times — or 1,000 percent — more than parents paid when Baby Boomers were teenagers.
Unlike in the mid-1970s, most medical tests and procedures vary in cost by 5 to 10 times within a short distance of home, but very few of us recognize this. When we consider that there is no relationship between costs and the quality in healthcare, and that we’re just as likely to get the best care at the lowest-cost facility, you might think that we’d all take a personal interest in how we choose the providers and locations we use to receive “shoppable” medical tests and procedures.
Most of us don’t, and it’s the ongoing industry rhetoric that continues to keep us from doing the thing most natural to consumers in such a situation — comparison shopping.
Most legislation aiming to mandate some sort of price transparency has simply provided plausible excuses for the industry to say, “we complied.” This provides them with cover so they aren’t subjected to the same consumer protection laws that affect goods and services in every other market.
What’s actually needed is less regulatory meddling and more free market principals to reward innovations that lead to higher-quality care at lower costs.
Read the full story at: https://bit.ly/2OgBito