Many hospitals charge exorbitant prices , and insurance premiums have skyrocketed more than 24% . According to the Cicero Institute , a nonpartisan, state-based policy think tank, “Despite 91% of Americans having health insurance, almost half of insured adults report difficulty paying out-of-pocket costs, while one in three patients report not being able to cover their deductible.”
Clearly, reform is needed. While many reformers point to price transparency as a means to lower healthcare costs, it’s not enough to just compel medical providers to post their prices of care. Since patients are locked into insurance networks, they are often prohibited from applying more cost-effective care toward their deductibles. Additionally, research shows that after meeting their deductibles, people use much more care because they pay so little at that point. Therefore, to lower healthcare costs effectively, we also need to correctly incentivize patients to shop around for affordable care.
A plan put forward by the Cicero Institute could do just that. Cicero calls its three-step, price-reducing, incentives-fixing plan the “ Patient’s Right to Save. ”
The first step is a form of price transparency: It’s a requirement that all medical care providers make their “cash prices” for nonemergency treatments publicly available.
The second step begins to deal with incentives. It would require insurers to allow patients to apply to their deductibles any treatment that costs less than the insurer’s lowest negotiated in-network rate, even if the chosen treatment is out of network. If insurers don’t want to post their lowest negotiated rate, the patients can use the price averages provided by the state’s insurance commissioner. Third-party apps, similar to those used for airline purchasing tickets or those similar to the cost-saving app Trim, could easily be developed to handle this process for patients — so it doesn’t need to be complicated or time-consuming.
The third and final step of the “Patient’s Right to Save” proposal would require insurers to give savings rebates back to the patients. After meeting their deductibles, if patients still use care that costs less than their insurance’s lowest negotiated rate for that care,the insurance company must give them a kickback of 50% of the savings.So if a patient chooses to get an X-ray costing $500 cash price and the lowest negotiated rate is $1,000 for their insurance plan, the insurance company pays the patient $250 — which is half of the savings. The insurer is overall paying $750 instead of $1,000 for the treatment.
Expanding price transparency and correctly aligning incentives for providers to charge lower prices is possible when patients are empowered and incentivized to shop for better value. In time, this will bring down the price rates across the whole industry.
The “Patient’s Right to Save” plan stands to benefit all patients but especially those with chronic conditions, as well as employers and insurance companies . Broad support for it should be a no-brainer. The Cicero Institute even offers model legislation for states to use.
Recently, “Patient’s Right to Save” would have saved me hundreds to thousands of dollars in my own life. I needed an MRI. My local hospital quoted me $5,000 if I submitted the procedure through my insurance and $2,500 if I paid for it without insurance (cash price). The better-quality hospital 45 minutes south quoted me around $2,000 for the insurance-applied rate and only $600 if I paid it myself — an overall difference of $1,400 for the same exact service.
I paid the $600, even though I could not apply it to my deductible. However, I ended up basically throwing that $600 away because a couple of weeks later, I had a car crash and accrued enough expenses to meet my deductible and out-of-pocket max. So it would have been better for me to choose the local, $5,000 deductible-applied rate than the nondeductible $600 cash price.
If “Patient’s Right to Save” had already been law, I could have applied that $600 cash price toward my deductible and not lost it. Furthermore, after my emergency room visit had met my deductible and out-of-pocket max, I could have paid the cash rate for my recovery care at the better, cheaper hospital and received a check for half of the likely hundreds of dollars that my price choices would have saved my insurance company.
Instead of losing hundreds of dollars, I would have gained hundreds or more, and prices across the whole system would have been positively affected. That’s the kind of choice and power that all patients deserve.