Skin in the Game
Time's Barbara Kiviat is on a new healthcare plan:
I used to be charged co-pays. About $25 a pop for office visits. Now I am under a system of co-insurance. After my yearly deductible, I pay 10% of all my health care costs, up to an annual out-of-pocket maximum.
This has immediately changed my behavior. I hurt my ankle a while back, but how I did that and what is ultimately causing the pain is a mystery. My first foot doctor was stumped. I went to see another one a few weeks ago and [...] one of the technicians fetched me for an X-ray. I asked how much the X-ray would cost. He said he didn't know, but he could try to find out... or would I just like to wait and see the doctor first? I said I'd wait.
The doctor came in and asked me a few questions. I explained that I'd been to another doctor. I repeated what that doctor had told me about the X-ray I'd had at his office. My new doctor examined me and told me that another X-ray wouldn't tell him what he needed to know. And that was how I prevented my very first unnecessary medical test.
Kiviat is a fan even though the new plan costs her more than the old one. Just knowing how much everything costs — and being responsible for a chunk of it — makes her a better healthcare consumer.
Now, before the HMO/PPO revolution, this sort of plan was pretty standard and healthcare costs skyrocketed anyway. What's more, since a big part of healthcare spending is for emergency services that nobody shops around for and big ticket items that exceed the out-of-pocket caps on these plans, it's not clear how much this kind of "skin in the game" would really save. Still, with some caveats that I won't go into right now, I think this is a good idea. Even if the effect on healthcare inflation were modest, that's better than nothing. And taming healthcare costs isn't going to be done with one big idea; it's going to be done by implementing a whole bunch of little ideas that each have a small effect.
Still, as Kiviat notes, a minimum requirement for making this work is knowing how much healthcare costs you in the first place. And this is something that really does, in theory, have bipartisan support: Democrats and Republicans both say that doctors and hospitals should be transparent about the cost of all the various procedures they offer. And Rep. Steve Kagen (D–Wisconsin) has introduced a bill that would require just that. It says that healthcare providers shall:
publicly disclose, on a continuous basis, all prices for such items, products, services, or procedures in accordance with this section....The disclosure required under subsection (a) shall be made in an open and conspicuous manner; be made available at the point of purchase, in print, and on the Internet; and include all wholesale, retail, subsidized, discounted, or other such prices.
And there's the rub. There is no "price" for an ankle X-ray. There are only prices. If Kagen's bill were law, Kiviat would have been confronted with something like this:
X-Ray, Ankle, Single View
• With bundling discount: $141
Anthem Blue Cross: $157
• After March 18, 2010: $203
• Discounted price if you complain hard enough: $275
• Discounted price if you complain even harder: $198
Actually, it would be way more complex than that. But you get the idea: it's not as simple as it sounds. However, this might be a feature, not a bug. Not only might healthcare consumption be improved by making prices transparent, but it might be improved by showing everyone just how arbitrarily different people are treated depending on what kind of insurance they have. It's worth a try.