Right now, few of the 150 million consumers with employer-based health insurance know what services and procedures actually cost. That's particularly the case for employees with low deductibles, as they never learn what their insurance company paid the service providers.
But even employees with high deductibles seldom learn much about the marketplace; rather than call around and find out what the cash price is for a service, many simply avoid getting that service at all. And even if they go ahead with getting a test or procedure, few are equipped to call around aggressively until they find the lowest cost.
All of this might look different, however, if consumers knew how widely prices range between providers for common services. According to research by Castlight Health, for example, MRI tests top out at $4,527 in New York City, but can also be had there for $416.
Castlight research also found that lipid panels range from $15 to $343 in Dallas, CT scans of the head/brain can cost anywhere from $264 to $3,271 in Philadelphia, and adult primary care visits range from $40 to $195 in Phoenix.
What's more, common services vary widely from city to city. An MRI of the lower back comes in at $2,635 in Sacramento, nearly three times more expensive than Seattle ($907), Castlight research notes. And a CT scan of the head/brain in Sacramento ($1,404) is more than two times the cost of the same scan in Orlando ($611).
Insurance companies push back
Insurance companies have begun to push back by implementing reference pricing, under which the health plan sets a price they'll pay for a service or procedure and require beneficiaries to pay any amount that goes over the reference price.
This method has seen some early success. In one case, the approach lowered the prices of hip and knee replacements by about a third after the California Public Employees' Retirement System required workers to pay all costs over the reference price of $30,000.
Ultimately, however, consumers will have to have easy access to cost and quality data—rather than having to gather it themselves—if we want to see prices normalize in the U.S. healthcare system. Both reference pricing and high-deductible plans put the burden of digging up pricing and quality information on the consumer, many of whom are too sick, too intimidated or too uncertain to guide their business to the right providers.
Pulling together a national, consumer-friendly, accessible cost and quality database is a formidable task, but I'd argue that it's absolutely essential if we want consumers to make cost-effective, quality-sensitive choices in their healthcare. Without comprehensive information in hand, consumers are likely to continue in their current habits—something we simply cannot afford.