Envision putting together an IKEA bookshelf with instructions in multiple languages, missing pages, and screws that vary significantly in price based on the store, without your knowledge. After completing the assembly, you find out you’ll be billed even more because you utilized an Allen wrench.
This scenario mirrors the typical experience faced by Americans maneuvering through the health care landscape—an experience seemingly crafted to induce confusion and deplete finances.
The statistics are telling: Americans incur $4,000 more annually on health care in comparison to other affluent nations. Last year, eighteen percent of adults received an unanticipated medical bill exceeding $1,000. One in ten seniors bears $10,000 or greater in medical debt.
However, these figures fail to reflect the emotional and psychological burden of seeking care without clarity on costs, only to be shocked by a bill afterward. The lack of clear pricing in American health care must cease. We hold a moral obligation to rectify a system that penalizes those it is designed to safeguard.
Systemic issues obstruct transparency.
The uncertainty surrounding the costs of medical procedures or services is not a novel situation. Previous efforts to elucidate pricing have been inadequate. The administration recently issued an executive order assuring patients of more precise pricing, but a similar promise was made six years ago without success.
The system appears engineered to serve everyone but the patients, as it is fraught with misaligned incentives that prioritize financial outcomes over quality care.
Most health systems function under a fee-for-service payment model that values volume over value. Providers are motivated to execute procedures and services with higher profit margins rather than those that may be more cost-efficient for patients. Furthermore, the absence of price competition allows hospitals to boost their margins since patients cannot shop around.
Conversely, health plans prosper with unclear pricing. They maintain confidentiality over negotiated rates with providers and establish intricate coverage rules to gain leverage in provider and patient interactions. This complexity fuels our nation’s low health insurance comprehension; half of Americans lack confidence in utilizing their health insurance.
These conflicting incentives forge a detrimental cycle: unexpected medical bills provoke mistrust in the health care system. Mistrust fosters avoidance of care. Avoiding care exacerbates conditions, and more serious issues necessitate pricier emergency interventions. A recent survey indicated that 41 percent of working-age adults who deferred care due to cost reported a decline in their health as a result.
These are not abstract dilemmas. They lead to financial ruin and intolerable choices for patients in their most vulnerable times.
This is not an insurmountable challenge: Ensuring transparency succeeds.
Although past reform measures have stumbled, we are at a pivotal juncture where technology, policy, and consumer advocacy are converging to advocate for substantive change.
Leveraging technology for transformation: Almost every other sector has advanced its consumer experience through modern technology, and health care must catch up. Contemporary digital tools enable care teams to swiftly share cost information, aiding patients in understanding their coverage and actual costs prior to care. For example, a patient can readily verify that each physical therapy session will incur $125 out-of-pocket, allowing for proper budgeting and avoiding the shock of unanticipated bills later on. While not yet widespread, these solutions are enhancing patient experiences and aiding in cost savings.
Enforcement that matters: At present, hospitals and health insurance plans encounter minimal repercussions for failing to disclose actual care costs, resulting in no changes. A recent audit revealed that almost half (46 percent) of hospitals are non-compliant with price transparency regulations. For transparency to be effective, we require robust enforcement, with hospitals and health plans accountable through substantial penalties for non-compliance. Existing policies are riddled with loopholes and require reassessment. For instance, hospitals should not be permitted to report price ranges and historical data instead of actual costs, and health insurance plans should not modify pricing based on aspects like age without informing patients.
Collective responsibility: Progress necessitates action from all parties involved. Hospitals, clinics, and insurance companies must utilize standardized data to ensure pricing information is consistent and easily shareable. Insurance companies need to offer clear, up-to-date cost estimates and flexible payment plans to prevent high-cost services from postponing treatment. Care teams should discuss costs during appointments and inform patients of alternative options. Patients ought to employ tools that make pricing information more available and persist in advocating for appropriate care. Envision using an app to compare MRI pricing across local facilities, comprehend out-of-pocket expenses, and find out from your doctor that an ultrasound could be a sufficient first step, significantly conserving money—all before scheduling a consultation.
We don’t need to overhaul the entire system to achieve price transparency; we need to reconfigure it so that financial success arises from quality care and positive experiences, rather than from chaos and confusion.
Ashish Mandavia is a physician executive.