Inflation in Healthcare

According to the labor department, consumer prices have increased 7.5% over the last year. It is currently the worst inflation in 40 years, and although this is fact, rapid price increase is something consumers of healthcare have been dealing with for a quite some time now. The data actually shows that healthcare consumers have dealt with similar elevated inflation levels for decades! Now what to do about it? The answer is something which Benefits Management Team (BMT) has been preaching for some time now, Price Transparency.

The current Biden administration hinted at price transparency as one the 72 initiatives to address inflation. If it is to be used as a serious tool to fight inflation, the administration will have to double down on support for healthcare price transparency. With reports from the Patients Rights Advocates, showing that only 14.3% of American hospitals are complying with the hospital price transparency rule that took effect January 2021, and ZERO fines being issued for noncompliance, the stance of the administration will have to get a lot tougher on violators.

The rule of 2021 implements a proven of the affordable Care Act, which requires hospitals to publish their discounted cash prices and all contracted rates with health insurer and employer health plans. Yet hospitals have failed to comply with the rule of price transparency. It is clear why hospitals are refusing to comply, the loses they will suffer financially outweigh the price of not complying, which right now is costing hospitals ZERO. Although hospitals have been issued warnings for noncompliance, they have paid zero in fines.

With no consequences for their actions, three of the nations largest hospital systems have a combined revenue of close to $120 billion, with only a 0.5% compliance record. To add further insult, The Department of Health and Human Services estimates it would cost each hospital $12,000 to become compliant. Yet Hospitals have no interest in becoming compliant, due to the fact that it would interfere with profits.

By denying the consumer access to prices are up front, they are able to blindside them weeks or months later with massive surprise billing that they never agreed to in the first place. Inflation in healthcare has been forced on the consumer by hospitals research show that hospitals mark up prices by an average of seven times their cost of care. According to a recent  L.A. Times report of leaked documents hospital pricing have showed a mark up of 675%. Keep in mind that hospital prices can vary by ten times for the same medical procedure at the same hospital, the only thing that that will change pricing of what you pay is how you pay it. 

Hospital gains and profits come at a cost for the consumer, with one-third of the country in medical debt, and two-thirds not getting the medical attention they require in order to avoid acquiring unwanted surprise billing. Just to put it into perspective, the federal government recently announced that the U.S. has spent $4.1 Trillion on healthcare on 2020 alone. This number is 20% of the annual GDP, which is double the average of the developed world.

The rising cost of healthcare is responsible for the suppression of business earnings and employee wages, meaning the cost of healthcare has been spent unwisely for decades now at the cost of the consumer. There is a solution in transparency pricing to help lower the inflation of healthcare, but the federal government has to hold hospitals accountable.

The current administration has the opportunity now to make, the hospital price transparency rule, be an effective tool to fight high medical cost. In order to do this they will have to have a strict, and very public, enforcement of non-compliance with fines and data disclosure standards. By enforcing the rules the Biden administration can use the strongest weapon in a free market economy, the power of the consumer. It is a fact, when the consumer has full disclosure of pricing, the information will help them avoid overcharging and price gauging. With these tools the consumer will change the market, simply due to the fact that they have access to the same quality procedures with less expensive alternatives.

Hospitals are going out of their way to have the consumer believe that price transparency will only raise healthcare prices, but facts are when employers and unions have access to actual pricing across plans, they are able to offer employees and members the best quality of care at a fair market price. Another fact is that competition in healthcare will result in lower cost for medical procedures, increase employees wages, and create a more competitive U.S. economy.

In July 2022, the federal government will set its sites on insurers with a new transparency rule. The new rule will require insurers to publish their negotiated rates and historical claims data. By enacting and enforcing the new rule, this administration has the opportunity to allow patients access to prices wherever they receive care. It will take the federal government taking price transparency seriously in order for inflation in healthcare to stop its vertical rise.

The enforcement of both rules has the potential to create a fictional, competitive healthcare system. By giving the consumer the access of choice, healthcare cost will be reduced, just like in every other sector of the economy. To be fully functional and effective, price transparency will have to implemented at every level systemwide. This means that even the even the middle players that profit by blindly charging consumers, will have reveal pricing. In order to achieve price transparency the consumer will have to start demanding to know "what is this going to cost me?"

For far too long now healthcare systems have trained and used the fact that we do not ask this question to benefit their pocketbooks. In-turn making hospital systems one of the richest industries in our country. We implore consumers to start asking questions of cost, find out about options like direct primary care, have an advocate like that from MediShield help you shop for pricing, and most importantly know that this process is not a road you have to travel alone.

Talk to a BMT expert today, and learn how to become a consumer of your healthcare, and not a victim of your insurance.

Let us show you how to shop smarter for healthcare today!