Health Care Prices are the Elephant in the Room

A March 29, 2013 posting by Uwe E. Reinhardt an economics professor at Princeton in the New York Times’ Economix blog (nyti.ms/14AR8oD) discusses a problem facing employers in the United States compared to other industrialized nations, health care pricing.   The range of pricing for medical services in the US varies so greatly due to the structure of both the the medical community and the payer for most services, insurers.  In many countries the payment system is less fragmented making pricing less varied for services.

One way to combat the variation is through transparency.  If consumers know and care about the prices of procedures and services, providers should respond with a more competitively responsive pricing setup.  However, due to many state regulatory structures, transparency in health pricing is not readily available to help individuals make better decisions.

The opportunity for employers, especially not for profits, where such decision making by employees can be the difference between achieving their goals or running short of funding.  Insurance companies are starting to put the tools into the hands of employees to see the variation of costs for services.  With smart plan design, employers can align the interests of the not for profits and their employees leading to cost savings without sacrificing service or quality.

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