Why is health care so expensive? In part, it’s because patients rarely have the opportunity to shop for a better deal. When you don’t know the price of a procedure before you receive it, how could you possibly weigh your options? While it is true that many patients have likely never considered shopping for savings on their health care, they’ve also never really been given a reason to. Fortunately, two states recently passed laws designed to encourage cost savings for patients and insurers alike.
A few months ago, laws went into effect in both Texas and Tennessee that provide patients with new avenues to avoid overpaying for health services. These laws offer a glimpse at one of the next steps for states in the effort to make prices more transparent. More specifically, these new “self-pay” laws allow individuals covered by certain health plans to receive deductible credit if they can find services cheaper than the rate their insurer negotiated.
Are there really that many services where patients could find cheaper prices than what their insurer has agreed to pay? Surprisingly, the answer appears to be yes. According to a recent report, when offering to pay cash instead of using insurance Josh Archambault found:
We recently made some phone calls in Nashville and found we could pay $541 in cash for a colonoscopy, far less than the $2,400 average rate the three largest insurers in the state negotiated. In fact, we found at least four providers in downtown Nashville that would charge less if we paid cash instead of using our insurance card.
In other words, it’s likely that many patients are currently overpaying for services when they use their insurance. And what these new laws do is allow patients to take the $541 option and require their insurer to count that spending toward their yearly deductible, as their insurer would do for any other spending on covered health services. For many patients, especially those with chronic illnesses, this change could result in significant cost savings.
As I’ve written before, price transparency isn’t a silver bullet for our health care system, but it will be key for lowering health care costs—if Missouri lawmakers ever decide to get serious on the issue. Going into this year’s legislative session, I hope our lawmakers decide to make tackling skyrocketing health care costs a priority. Following what’s recently worked for both Texas and Tennessee would represent a step in the right direction.
