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Imagine a market where you didn’t know the price of anything until you got the bill. Imagine a market where you could be charged after the fact for items you didn’t know you bought. Imagine a market where the poorest customers had to pay the highest prices. And imagine that your well-being, even your life, would be in danger if you didn’t shop there.
It sounds like something out of a gangster movie or science fiction novel. In fact, this market exists in real life. Nearly all of us are its customers. It’s called the health care system.
It is well known that our health care system is badly in need of reform. But the exact nature of the problems is not widely understood. One of the biggest problems with our health care system is that it lacks transparency – in other words, it lacks the ability for patients and doctors to know what its services and products cost.
Price tags are hidden in our health care system largely because only the most disadvantaged patients pay the whole bill out of their own pockets. Costs vary depending on which insurer or health plan you have, with the uninsured – those least able to pay – paying the highest prices of all. Medical fees vary widely from clinic to clinic and hospital to hospital, giving consumers little protection against unexpected and unknown charges. Comparison-shopping is all but impossible.
As unfair as this situation is, we’re accustomed to it. Many are resigned to it. Therefore, people are often surprised when they hear the solutions to these problems are remarkably simple. All that’s needed is the political will to implement the solutions over the objections of the well-funded few who are profiting from the current mess.
One solution to the transparency problem in health care would be a standard schedule for medical fees. That doesn’t mean all health care providers would charge the same prices. It means the state would generate a set of standard medical fees, with each provider stating its fees up front as a percentage of the schedule – making comparisons easy and ensuring that all patients are charged the same amount for the same procedure from the same doctor. This solution is even simpler than it sounds, because such fee schedules already exist. The state would simply have to pick or modify one of them.
The logical next step would be for insurers and health plans to set their reimbursement rates the same way – as a percentage of the standard fee schedule. This would make it easy for everyone to know not only what a provider charges but also what their insurers will pay for medical services.
Finally, if a health care facility is not a provider under a patient’s health plan, the facility should be required to tell the patient ahead of time. Patients can’t be expected to keep track of constantly changing contracts between hospitals and insurers. The hospitals that are signing the contracts should be responsible for disclosing them.
These common-sense reforms would trigger drastic improvements in the state's health care system. We would enjoy a truly open marketplace for health. Many disputes that cause patients to be “stuck” with large portions of their bills would be eliminated. Doctors would have market incentive to keep their costs fair. Consumers would face far fewer unpleasant surprises on their post-surgery bills. And health care would have price tags for all – patients, doctors, and insurers – to see and compare. Most important, farmers, small business owners and individuals would be able to access health care at fair prices. No longer will they be stuck subsidizing the costs of large companies.
There is good news on the health care transparency front at the State Capitol. Rep. Mark Miller of Monona has introduced a bill that takes a heartening first step toward some of these overdue reforms. Let’s hope momentum builds in the Legislature to follow through on what Rep. Miller has started and forge a fair, transparent system of health care in Wisconsin.
Meanwhile, it’s time for everyone to hold lawmakers accountable for cleaning up the health care disaster that is threatening to bankrupt our government and too many of our people. As is often the case, where Wisconsin leads on health care, America may well follow.
Alan J. Jacobs is executive director of the WEA Trust, a non-profit trust fund that provides life, health, and other insurance programs to more than 200,000 Wisconsin public school employees and dependents. A former high school math teacher, Jacobs is a frequent speaker on health care reform at forums across the country.
Resource page on the health care cost crisis
Posted March 24, 2004