It’s a Copay Kind of World- The Real Costs of Healthcare

Many consumers scour the internet for deals, cut coupons and wake up before dawn the day after Thanksgiving in order to find the lowest prices available. But few people consider the real cost of healthcare because they never see the bill.

Americans receive more than 30 million MRIs every year – with an average price tag of $2,600 – but the test is covered by insurance. And since health insurance is relatively inexpensive compared to the potentially astronomical cost of medical care, health consumers rarely think twice before having these pricey procedures.

“Right now the healthcare services consumer in American pays only about twelve cents per dollar spent on healthcare services,” said Derrick Wilburn, a conservative columnist. “The other eighty-eight cents is paid by someone else. “

This level of coverage applies to mental health treatment as well. Since 2010, when the Mental Health Parity and Addiction Equity Act went into effect, insurance companies that cover mental health care cannot place restrictions on benefits that do not apply to other health problems.

Patients are often entirely unaware of exactly how much their treatment costs. But a recent study shows that informed patients are more likely to choose the inexpensive option.

“Unlike other areas of the U.S. economy where it’s typical for people to compare prices before purchasing, health care consumers seldom know what they’ll pay for a procedure, meaning they have no basis for comparing costs,” said Dr. Eric Scaife, the lead author of the September study. “But our research found that when they have the information, consumers want to be in on health care decisions and that cost can influence what they choose when procedures are equally effective and have similar outcomes.”

Scaife’s study gave 49 children and their parents a unique option to choose between two styles of appendix removal – both with the same safety rate. They chose between less frequently used open operation and the more modern laparoscopic style surgery, which costs about $1,500 more. When presented with the price difference, parents were 1.8 times more likely to choose the less expensive procedure when compared to an uninformed control group.

The Washington Post showed the major differences in medical costs between developed nations

The cost of medical procedures is not the same from one hospital to the next. An average bill for a patient at George Washington University hospital was $115,000, but the same treatment was $53,000 at Providence Hospital, according to a 2013 Washington Post article. Las Colinas Medical Center just outside Dallas charged $160,832 for lower joint replacements, while Baylor Medical Center (five miles away) charged $42,632.

Such differences would put retailers out of business. But insured customers are often entirely unaware of how much their procedures really cost.

“You have a lot of private insurance companies where the consumer pays a portion of the charge,” said Renee Hsia, an assistant professor at the University of California at San Francisco Medical School in an interview with the Washington Post. “For uninsured patients, they face the full bill. In that sense, the price matters.”

Some doctors have decided to circumvent the hassles that can come from dealing with insurance companies and have stopped taking insurance altogether. Many physicians complain that the modern insurance system results in significant overheads that could be reduced with a new model.

“The current model for primary care is broken,” said Dr. David Edelson, a physician who has stopped accepting insurance, in an interview with the New York Times. “Either I can go down with the ship, sell my practice to a hospital or take my practice in the wrong direction. Or I can develop a better mousetrap, which is more time dealing with patients and their care.”

Americans spend more money per person on health care than any other developed nation at nearly 18 percent of total Gross Domestic Product. With spending on hospital visits and medications rising by 3.9 percent in 2011, the U.S. government projects that health care will account for more than 20 percent of the nation’s GDP by 2021.

“We’ve been conditioned to an entitlement mentality toward healthcare insurance; to believe that we are entitled to something at little or no cost to ourselves,” Wilburn said.


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