Of all the expensive services and products I can think of, only one denies to the consumer the leveling effect of competition and market pricing, and that is health care. The way it works here in the most developed country in the world is non sensical. If, like 85% of everybody now, you have some form of health insurance, either through your employer or a federal agency like Medicare or Medicaid, you don’t even ask what things cost. When you get sick or hurt, you just enter the system and place yourself at its mercy. If you are one of the 15% uninsured you are probably either too poor to afford insurance or don’t have good sense. Or a “young invincible”. Or too rich for it to matter.
If you do have healthcare insurance, your insurer is supposed to negotiate pricing, and they do as best they can. But the negotiations are hamstrung by a paucity of data. Even the federal government has problems with it. Why? Well, healthcare is complicated and subjective. A half century ago there was no standard pricing at all, but then Medicare got into the act and, just for the elderly, they set up pricing for everything from bunions to bypasses. That was both good and bad. Doctors and hospitals were aghast at first, but they soon came to love it because for the first time they could charge for all they did instead of bundling everything into what they thought people could pay.
But Medicare still negotiates and the result is pricing that has started to become standard. But, what is the basis of even those prices? The medical industry and the AMA have been fighting attempts at data collection and analysis and transparency of pricing at least since the 1970’s. In 1979 a federal court in Florida granted the AMA an injunction barring release of doctor-specific Medicare information, and that is pretty much where it stood until now. Pricing varies wildly and has no rational basis.
The situation is finally changing. Based on a court order the injunction has just been lifted and the Centers for Medicare and Medicaid Services (CMS) have released data on more than 880,000 doctors and other medical providers who collectively received $77 billion from Medicare in 2012. The medical industry is crying foul and appealing on the basis of privacy, both of doctors and patients, but that is a thin argument. Consumers are being skinned. One ophthalmologist alone took in more than $20 million from Medicare in 2012. The USA Today newspaper was prevented from contacting him under the legal provisions that lifted the 1979 injunction and permitted the release of the pricing data.
The veil is starting to drop. If pricing does become transparent, then both insurers and the high-deductable insured can better shop and the market will begin to matter, not just for the elderly but for all, and that includes all the newly-insured under the Affordable Care Act.
This development could be a game-changer, but it is only happening under a Democratic administration. What I fear is that under the GOP it would be reversed under the pretense that healthcare pricing is not the unique thing that it is.