Shopping for Health Care
I am exhausted with folks who have never tried to shop for health care telling me that it can't be done, despite the fact that I do it all the time and achieve substantial savings. This is a meme developped and maintained solely to support government power by declaring that there is a market failure in the pricing mechanics in the health care industry that can only be solved through regulation and price controls. I wrote in response
I agree that the pricing in health care is often arbitrary and capricious. Of course some suppliers are going to try to soak third party payers. But I don't think simply changing the payer (from private to public) or having a government bureaucracy set prices for millions of line items is the solution. My diagnosis is that health care lacks the one thing we have for most every other product or service: shopping.
Now, you try to head off this argument with a few folks who claim shopping is impossible in health care. But that is absurd. There is a large and growing community of us who have real health insurance, rather than pre-paid medical plans, which means we have high deductibles. We pay all of our regular expenses out of pocket, and maintain health insurance for large, unpredictable, potentially bankrupting expenses.
I must admit that shopping for health care seemed odd and a bit intimidating at first, having lived for years in the world of gold-plated, pay-for-everything corporate health care accounts. But it really is not that hard. I have consistently knocked down the cost of everything from x-rays for my kids' fractures to colonoscopies by a half to two-thirds. I am now used to doctors and providers having that second price book under the counter they go to if they know you don't have a third-party payer they can soak. We always research and ask for generics. We think twice before accepting the need for an expensive test, like a MRI, and price shop it if we have to have one. I push back on my dentist who tries to x-ray my teeth every few months. I have many friends that saved a ton of money on oncology treatments by just doing a little shopping.
I am exhausted with academics and writers who have never tried to shop for health care telling me it is impossible. Many of us do it, and there are more and more resources out there for us. Sure, there are certain things I am not going to have the time or ability to price shop -- if I am lying on my back having a heart attack, my wife (hopefully) is not going to check rates at the hospitals. But it is a fraud to extrapolate from this minority of health care situations to all health care expenditures.
The other argument is used is that at the beginning of a health care interaction we may not know exactly what care is needed. So what? The same is true of auto repair, but I don't blithely allow the repairs to proceed at any cost just because I didn't know up front what the diagnosis would be. I get an estimate when each new problem is found, and I have on several occasions interrupted a car repair, told them their price was too high on certain repairs, and went elsewhere for the repair or deferred it entirely.
Let's suppose there is some sort of market failure for 10-20% of health care charges where price shopping is impossible. Then let's discuss government regulatory approaches for those situations. But for the other 80-90%, we should be structuring a health care system where consumers provide the price regulation, as they do in nearly every other industry, by shopping.
As a note, some people are exhausted by the idea of shopping. My first response is, so what? Get over it. We are not going to take over a whole industry just to free you from a bit of hassle. The second response is that research shows that only a small percentage of buyers need to be price shoppers to enforce price discipline. I generally trust that Amazon has low prices and don't always check them, because I know there are much, much more rabid people who do care and do check.
Over time, I have found physicians who are both sympathetic and cooperative with this approach and actively help us minimize the cost of our care. Its just amazing -- somehow we accept this image as a doctor being above all this cost stuff, in fact with considerations of price and cost being corrupting to their mission of keeping us healthy. Imagine a car mechanic that took that attitude -- "I'm the expert here and you will pay whatever it costs to do what I say you need to do." Would you fire the mechanic and find a better and cheaper one, or would you suggest that what we really need is a massive new government bureaucracy to set prices for every imaginable repair a car might need.
Sometimes I suspect much of the support for government health care is from people who see shopping and taking responsibility for their own care as too much of a hassle.
Johnathan:
"Sometimes I suspect much of the support for government health care is from people who see shopping and taking responsibility for their own care as too much of a hassle."
I think this applies to many people and for a far wider range of government "services" than medical care.
April 24, 2012, 9:30 amme:
Hah. I remember trying to get price quotes from a hospital beforehand for an entirely optional procedure, full cash paid. Turns out, they could not even ballpark. Not set up for it.
The other fond memory I have is negotiating with a dentist upfront for orthodontics. Set a price, agreed... and he ended up billing me at insurance rates for all sorts of care that didn't effectively happen. I couldn't prove it, so I lost that court case and the money (his billing + generic practice thing I signed years ago were sufficient?!).
The US medical system badly needs shopping for care. It is also absolutely not set up for it right now, missing (a) pricing and (b) trust/consumer friendly enforcement.
April 24, 2012, 9:31 amCurtis:
Until recently I had my own health insurance (catastrophic) but my wife got a job with the state and we now have the public employee benefits. I have a prescription that cost me around $80. The same pharmacy charges the state insurance company $220 with me paying $70 of that. Apparently, the pharmacy has "discounts" for some of the expensive drugs knowing that ordinary people cannot afford them. But the state insurance has an infinite supply of money and the sky is the limit. It's funny how bulk discount don't work with state organizations.
(I wonder which pharmacy lobbyist was involved?)
April 24, 2012, 9:36 ambtf:
"somehow we accept this image as a doctor being above all this cost stuff"
Maybe because the doctors do their best to reinforce that image?! When I still had and HSA and was interviewing with a potential pediatrician the doctor could not even tell me how much an office visit was, that blew my mind! After I asked a few other cost questions, like how much was the discount for paying at the time of service, she called her billing specialist in because she could not answer any of my questions (billing specialist wasn't that helpful either, apparently HSA's are not popular in Indiana, neither had any idea what it was).
The amazing thing is that the dr's in these types of small practices are essentially just small business owners. This lady owned a business and yet had no idea what she was charging for her most basic services!
April 24, 2012, 10:17 amSteve:
Right on. Unfortunately I have recently needed to be a consumer of our health care system, from valve repair to cancer surgery. I have shopped CT scripts and colonoscopie procedures. We have a high deductible health plan(10K as a couple). Shopping these procedures resulted in a savings in excess of $3200.00. If I had not mentioned the fact that I had insurance even though I would not be looking for reimbursement the savings would have been much greater. An acquittance was involved several imaging centers (owner) and he discussed insurance reimbursements for various scripts versus prices he would be happy to charge based on overhead etc. and the prices were several magnitudes apart. Don't even think about charges when it came to workman's comp.
April 24, 2012, 10:18 amLoneSnark:
I purchased high-deductive insurance about six months ago, the absolutely cheapest insurance I could find, and was surprised by what I actually got. I figured I was just getting $5k deductible insurance. What I got instead was the $5k deductible insurance plus negotiated fee-schedules for services at various providers around town. It felt identical to various dental discount plans I've used occasionally. I needed a test done and to my shock the negotiated rate through my insurance provider was nearly 10% less than what I could find anywhere else offering cash (although when told the fee-schedule one provider did agree to match it but would not go lower).
Best I can tell my insurer only offers high-deductible insurance. As such, what I believe this means is that my insurer went around town and negotiated cash-like prices for their understandably price conscious customers.
That said, it was a minor bundle of tests. No telling how the prices will work out when the time comes for actually expensive treatments.
April 24, 2012, 11:02 amMoses:
I have tried for two years to get such plans, but I am having trouble finding agents in California who understand or care enough to help. Can any of you offer the names of companies, plan titles,or agents you are using to give the rest of us a leg up?
April 24, 2012, 12:06 pmMark2:
Yeah, I have private health care and got some, I have to pay Tier 5 prices because I failed a Cholesterol test. Of course now we are finding that Statins may not be good and cholesterol testing is a government conspiracy, but no matter.
If I refused to control the Cholesterol with statins, I would have had to wait six months without insurance and then apply for the State program which is at maximum rates and probably 50% more than what I pay now.
Seriously no medical conditions except high cholesterol @ at age 45 and I get the max tier rate. If I had anything else - active asthma - for instance, I would be uninsurable except in the the state system.
I know it isn't impossible but they sure make it difficult. I think some of this has to do with lack of competition in the market and bizarre regulations. Eg the new federal mandates that force me to buy a "free checkup per year, and free testing."
April 24, 2012, 12:14 pmSilvermine:
Yeah, I thought it would be fine and easy too but couldn't find a plan that would take my husband. Yay.
April 24, 2012, 1:15 pmme:
Yikes - Mark2, if you ever wondered - stay the hell away from statins.
I took some due to my doctors recommendation about slightly elevated cholesterol values when I was 25. Three months later, my liver values were out-of-this world, and 20k of medical tests later I was diagnosed with non-alcoholic-fatty-liver-disease (if you've never researched it: it means "we don't know what this is, but your liver is definitely cirrhotic and you are not an alcoholic"). Totally f-ed me over. Those things are really dangerous.
April 24, 2012, 1:21 pmEscapedWestOfTheBigMuddy:
Even those who aren't shopping themselves can see that the care providers are willing to do business for much less than the nominal "price" they charge. Just read your Explanations of Benefits and see how much of that "price" your provider is actually getting.
Then try to guess how much they'd be will to discount the "price" if there was cash on the table.
As an aside, while living in a smallish, blue-collar community on the east coast of the US, my spouse and I had a doctor who would make house calls and was available outside of normal business hours on short notice if you needed him. None-the-less, his prices were comparable to the after-write-down prices charged by other practices in the area. How did he manage it? Three things: (1) there was a price uptick for those services, (2) he took cash, check or credit but never filed insurance (you did that yourself) and (3) as a consequence of #2 his only staff was a nurse.
Given as how my other half usually has to correct billing errors from other doctor's offices this didn't even make much more work.
April 24, 2012, 1:28 pmme:
@Escape
Actually, I know the answer to that one - if you pay cash, you have to pay the full price quoted. Been down that road with my dentist (see above)
April 24, 2012, 2:16 pmGoober:
It seems strange to me the the only good and/or service that we buy that we don't know up-front how much it is going to cost is healthcare. How did that slip by?
I'll give you a hint - it has something to do with government...
If I had been able to shop for my MRI up front, with price quotes, I could have gotten it for $1,250 here in my hometown. As it were, the place where they sent me (referral) charged almost $6,500 and my deductible on the thing was $1,250. i paid the same each way, only with my current health plan, I and my employer pay big deductibles for the priveledge.
I think that we could go a long way towards fixing our healthcare issues by just rolling back the rules and laws that caused the market to trend away from people knowing their costs up front.
I go to my auto mechanic, I get an up-front quote for diagnosis, and then another quote for what the repair will cost once diagnosed. I can choose to go with it, or call another mechanic to get another quote, ad infinitum, until i get the best price.
The problem is that lots of doctors don't do this - they don't even know what they are charging, much less give you a quote for X.
In my perfect world, health insurance would be de-coupled from employment, would be INSURANCE, not a pre-paid helath plan, we would have tax-free HSAs to cover decutibles, and every doctor on earth would give up-front quotes fro good and services, just like every other service on Earth.
April 24, 2012, 2:58 pmwilliwonte:
You are missing the big point. Health insurance is not health care. You can shop for health insurance and achieve the goals you mentioned. It is harder to shop for health care unless you are not in pain and are conscious and have the time to shop with your broken leg or appendicitis.
April 24, 2012, 3:21 pmwilliwonte:
Physicians will work with you on office visits and minor office procedures. The problems are with surgeries and hospitalizations. The anesthesiologist is rarely negotiable. The pathologist and blood work is done, you can argue later but you are not in the best position.
Insurance plans have negotiated contracts with hospitals and physicians. These are huge discounts. Read an Explanation of your insurance bill - note large contractual discount. Also note that a number of items are excluded as being included in billed procedure.
Let's take a simple case of chest pain. Do you wait until the morning or better until Monday to go check out the cause. Once in the system who says, I think I will leave and go down the street for a second opinion or a cheaper price. Please recognize that no where have you talked about improving the quality of the care you received.
April 24, 2012, 3:32 pmNormD:
I needed DTaP shots for my kids. Doc billed Insurance $390 for said shot. Insurance paid $220, I was billed $60. I called around. Costco charged $55 for shot. I called Insurance and asked if I went to Costco would they pay for it since they were saving $170. Nope. "Costco is not 'under contract'". I figured out that under CA law if I went to the doc's office and got the shot not as part of a doctor visit but for a vaccination-only visit, my cost was $0. Insurance still paid $220.
The whole system is a f***ing mess.
April 24, 2012, 4:02 pmbtf:
@moses,
April 24, 2012, 4:31 pmI got my high deductible insurance through HSA for america, they are a broker and will shop around for the best available policy for you, as well as help set up your HSA account if you like. They were generally very good, available, helpful and knowledgeable enough to help navigate the ever changing laws surrounding HSA's.
rg:
yep! second all that. take ownership! catastrophic insurance and use the walk-in services out of pocket for the rest. for the complainers, I would ask them to compare what they pay for their car(s) - capital plus maintenance plus insurance - and then compare to what they invest in their own health care. Not to mention cell phones, internet, cable, eating out, etc etc. That would be an interesting comparison study across the fruited plains.
April 24, 2012, 4:59 pmNeo:
One would think that somebody would figure out the system, but from what I see, anybody who does merely goes into health care sales. The Mafia figured out a few years back that the sales rep for health care gets something like 17% of the take, so they used their influence with the unions to become their health care sales rep .. it's like stealing and it's a legit.
April 24, 2012, 5:02 pmjoshv:
Warren, I am not sure why you feel the need to shop around - I've had two high deductible insurance plans. In both cases, *all* costs are billed through the insurance company at the rates negotiated by the insurance company. So I get the insurance company discount, no matter what. Now if I happen to be below my deductible for the year, I pay the provider, if I am above the deductible the insurance company pays - but it's the same amount.
You seem to have this notion that the insurance companies are getting soaked - nope, I assure you, the reimbursement rates are consistently 30-50% off the "retail" price originally charged, and in every case I've seen, the provider accepts the discount price.
As for negotiation. We took my wife to the hospital for a small surgical procedure on her hand. They were utterly incapable of telling us what it would cost. I talked to several people and never even got a good estimate. The doctor looked at me like I'd just shit on his clean floor when I asked the question. What, him, sully himself with the grimy specifics of what his work costs his clients? How dare I.
We did manage to convince them that she didn't need general anesthetic, but could manage with a local anesthetic. This sped her recovery by several hours, cost less (though we were never told by how much), and was safer. I'd like to think that if there weren't gold plated insurance plans that cover general anesthesia no matter what, more people would take the cheaper, safer route.
April 24, 2012, 5:55 pmJW:
"Sure, there are certain things I am not going to have the time or ability to price shop — if I am lying on my back having a heart attack, my wife (hopefully) is not going to check rates at the hospitals.
But, if you're starving to death, you won't haggle over the cost of the lobster, therefore, we must have single-payer restaurants.
April 24, 2012, 8:15 pmMark2:
@willewonte, I was looking to buy a high deductible plan but it turned out to be more expensive than the tier 5 plan I have now.
I think part of it is the new requirements that force free visits and free tests upon the insurers. I suppose some goes to Sandra Flukes birth control too.
April 24, 2012, 9:53 pmGil:
Healthcare is expensive because society obliges that people are to be treated when sick as opposed as to what they can afford. If a hobo enters a hospital with early-stage cancer then the hospital is obliged to treat him as opposed to sending him on his way. Healthcare was cheaper a century because not much medicine was available. Modern medicine might as well be defined when penicillin became available - around 1940.
April 25, 2012, 1:12 amsamsam von virginia:
Below is a link to a letter that appeared in a local newspaper; a woman who can't pass the normal TB test needed a chest Xray to prove she doesn't have TB. She shopped around and found prices ranged from over $500 for Xray + reading, down to $78.
http://www2.starexponent.com/news/2009/nov/11/why_so_much_for_an_x-ray-ar-328788/
April 25, 2012, 1:59 amregularjoeski:
The craziest part is that docs can not actually compete on price. Insurers do not respond to "every day low prices". They are only interested in percent off or here is what I will pay take it or leave it. If you provide good inexpensive care there is no benefit to the doc. Patients who are insured don't care, the insurance company doesn't care, the local hospitals get upset, and medicare carriers still try to screw you over. Generic drugs were cheaper until insurance started paying for them. Now occasionally generics are higher than brand but insurance pays. Why? Because the company set a policy that "generics are tier 1" no matter that there is a cheaper alternative. Sometimes cash is cheaper than the insurance copay. Hospital bills used to be flat priced so you could get shop. Now you can't due to insurance pressures. The system is what you expect when the price discovery mechanism is short circuited. It's Milton Friedman's buying a car for other people analogy in real life
April 25, 2012, 3:05 amDavid:
I wrote years ago that the single most useful medical reform would be be a requirement for doctors to post prices (ok in a pamphlet) which could be examined before (non-emergency) service, much like an auto mechanic.
One thing you didn't note, but my wife and I have discovered since we got sick, is that if you're in the "I'm paying cash" crowd you can get a vastly better standard of care.
April 25, 2012, 4:09 ammoses:
@btf
Thanks for the information.
April 25, 2012, 7:55 amMaddog:
Interesting. I live in Oregon and just went through the process of insurance shopping and applying yesterday. Here is what I found:
1. I used an aggregating broker: http://www.gohealthinsurance.com/instantquote.jsp
2. Here is the quote page I obtained just a minute ago (this was a quote for a 50ish year old male): http://www.gohealthinsurance.com/instant/quoteengine.jsp?page=Plans
3. Prices start at $104 per month for a $10,000 deductible, 40% coinsurance to the out-of-pocket max of $15,000, the annual max is $2,000,000 but there is no lifetime max coverage amount. The next policy cost $129 per month with $10,000 deductible, 30% coinsurance up to a $17,500 out-of-pocket max but had no annual max and no lifetime max coverage amounts.
All but the destitute can afford $1200 to $1600 per year for these products. The family (4 persons) products were about triple the single rate so about $3600 to $4500. Again all but the destitute can afford these products if they choose. For a young male born in 1990 the prices drop to $36 per month or $432 per year.
Don’t call these unaffordable.
4. My family of four with late 40/50ish parents and two children will cost $471 per month or $5652 per year with a $7,000 deductible with a max $10,000 out-of-pocket. Essentially we pay for everything below $7000 and there is a 50% copay until we reach $10,000, then the insurance pays most everything. It will be cheaper to put our son on a separate policy at age 18 and drop him from our coverage and we will evaluate that option when it arises.
5. About $1500 of the cost are frivolities added by the State of Oregon and the feds because I am too stupid to decide on my own whether I need or want them. I would mostly rather pay less and always rather make the choice on my own.
6. I could have saved some money by going with a $10,000 deductible but because it would have had between a $22,500 and $30,000 total out-of-pocket, I decided to go with the lower out-of-pocket until we have time to salt more into our HSA. I frankly would rather have ten years of deductible in my HSA and a bit higher premium then a slightly lower premium and only three years of deductible. We are all different.
Other things I have learned over the years:
1. Most health care costs can be planned. Inoculations, routine office visits, preventative care, blood testing, and much more can be planned. The unplannable events are not price negotiable anyway.
2. For lab testing see here: http://blog.healthcheckusa.com/blood-tests/low-cost-affordable-blood-testing-made-easy-at-healthcheckusa/
Or here: http://www.anylabtestnow.com/Find_Us.aspx
Or here: http://www.mdlabtests.com/
You can look for more yourself!
For simple low cost medical services like an office visit for colds, cough, flu or tier 1 problems, we locally use Zoom Care: http://www.zoomcare.com/
Notice they have Skype visits where you do not need to leave home to see a doctor. A regular visit costs $99 and a Skype visit costs $49. They have low cost lab testing and supplies as well.
And you may have Wal-Mart or some other low cost provider: http://mjperry.blogspot.com/2009/11/rx-wal-marts-healthcare-plan-50-office.html
Wal-Mart plans to charge about $50 per visit.
3. Don’t forget Costco and others for low costs injections, vaccines, and tests as well. They are also likely to get into the doc-in-a-box business once Wal-Mart pioneers the way.
4. Insurers often have a large number of subscribers in a region and will negotiate prices with the doctors, clinics and facilities in the region. Even individual policies have access to use these rates but you must do some footwork to find who has the best rates for the services you need. Visit the insurer’s web site or call to see if such benefits apply to you.
5. Doctors do not like to negotiate prices but for many services they will, just ask.
The real take away after reading many of the other comments is that we would be better off if nearly everyone had a major medical policy with a deductible/out-of-pocket max that suited them ranging from $2500 to perhaps $10,000 or $20,000 ($20,000 to $30,000 for a family). This would eliminate the oddities of the insurer paying much more than the individual can source a product for and would encourage the providers to compete on cost. This is one of the only industries where technology causes prices to rise not fall and where technology results in lowering of productivity. Once the user of the insurance and the payor of the insurance premium are the same these discontinuities will stop, and most likely reverse leading to lowering not rising medical costs.
I hope this helped.
Your insurance buying commentator,
April 25, 2012, 12:59 pmMark Sherman
Goober:
Willwonte said: "You are missing the big point. Health insurance is not health care. You can shop for health insurance and achieve the goals you mentioned."
I didn't miss any point at all. Shopping for health insurance and shopping for health care are not mutually exclusive activities. Why can't I do both? Why is the industry set up so that shopping for health care (not insurance) is like trying to pull teeth on a pissed off honey badger?
And to all the folks out there saying that when I have chest pains or break my leg, I won't have time to shop - fine, you're right. I probably won't be picky about where I go, it will likely be the nearest emegency room. But for 95% of my health care (the non-emergent portion of it) that argument doesn't hold any water. Besides, if the health care market became a more competitive market, with people shopping, even if you went in blind on occasion, you'd still get a lot better deal because the prices that things SHOULD cost are readily available and the emergency rooms would not be exempt from those market forces.
Think about your car breaking down. If it is still running, but needs work, you have time to shop around and make sure shops are competitive. A large portion of that auto shop's revenue will come about because they were the most competitive or provided the best service for the dollar spent - a much smaller portion will be the odd rare emergency where someone is towed in and has no choice in where they go. Shops that are ridiculously expensive won't last long, so in the rare emergency case where you break down on a trip and can only go to the nearest auto shop without shopping around, you can still feel confident that you are getting a reasonable price for your services.
In my MRI example above, I guarantee you that one auto shop isn't charging 520% more than the next guy for identical services - they can't, or they'd be out of business. Yet, in our healtcare industry, this is allowed and can continue to be allowed because no one knows any better because no one knows the prices.
I still say that we could totally fix every problem with healthcare if we just changed our attitudes about insurance (high deductible plans), de-coupled from employment, with HSA tax-free accounts to pay premiums and up to the deductible amount that you don't sacrifice at the end of the year but you do have to pay taxes on whatever isn't spent), posted prices for care, and allowed perfect competition in teh healthcare markets (which we really don't now).
As for the less fortunate among us that still won't be able to afford health care even with these cost-improving measures, i don't have a good answer, but I do know that the answer is not best dealt with at the federal level. This is a state issue.
April 25, 2012, 2:47 pmDoctorT:
I can confirm that sometimes it is impossible to purchase health care insurance. Years ago I was a contract employee (no benefits) and tried to purchase catastrophic health insurance for my family. I tried many insurers, including ones affiliated with the College of American Pathologists and the American Medical Association. Not one would provide coverage for my family at any price. Why? Because my wife has Sjogren's syndrome (a nasty variant of rheumatoid arthritis that also damages all the moisture-producing glands including the ones that make tears and saliva) and my eldest daughter has an unknown liver disease that resembles sclerosing cholangitis.
At this time no company will insure any of my immediate family because my youngest daughter has juvenile arthritis and I have bipolar disorder. The only way for us to get insurance is by getting hired by a company or government that provides health insurance in a state that limits the exclusion period for pre-existing conditions. My wife and I are in our late 50s, have applied for multiple jobs, and never got to the interview stage. (Two more data points about the complete ineffectiveness of laws prohibiting age discrimination in hiring.)
April 25, 2012, 5:46 pmfrankania:
When we lived in the USA, we used to arrange dental & non-urgent operations in MEXICO--saved lots of $ & had a free vacation!
Now we live in Mexico & it is really easy. Private clinics charge from $2 to $20, specialists up to $45; medicine is VERY cheap an no prescription is necessary.
It is calle free enterprise.
April 26, 2012, 7:09 am