Here is a simple test for whether Republicans are serious about creating a patient-centered, market-based health-care system — or whether they simply want the political satisfaction of appearing to have repealed and replaced Obamacare.
For years, Republicans have argued the key to expanding health insurance coverage is restraining health-care spending — and the key to restraining health-care spending is giving consumers more incentive to consume only what they really need and shop around for the best value. Liberals tend to scoff at this idea. Are people really going to shop around for the best hospital rate while lying half-conscious in the back of an ambulance? Still, there is evidence that people do become more cost-conscious about routine care when they have more of their own money on the line.
The problem is that, even if you wanted to shop around for value, right now that’s almost impossible. To do so, prices and measures of quality would have to be transparent, readily available and easy to understand. Instead, prices are hard to determine and vary widely from customer to customer, while the few quality measures that exist tend to be inclusive and unreliable.
Ask yourself: When was the last time you saw a price list at a doctor's office or on a hospital’s website? Probably never.
In fact, for most services or drugs, there is no one price. There is the price that Aetna negotiates to pay on behalf of its customers, the price Anthem negotiates, the price Medicare pays and the price Medicaid pays. All of those are at steep discounts from the arbitrary and inflated official posted price that only people without insurance coverage are billed, which can only be found on a list that nobody can find.
To address this lack of price transparency, the Centers for Medicare and Medicaid Services (CMS) during the Obama administration launched a public database of charges by doctors, hospitals, drug companies and other providers. You can find it here. If you are a professional researcher, you might be able to figure out which hospital in Minneapolis has the lowest posted price for a heart transplant or any of 100 other of the most common procedures. But if you are like most of us, you’ll probably give up before gleaning any useful information. And even if you do, the information will bear no relationship to the incomprehensible jumble of individual fees — for everything from two aspirins to an IV drip to an hour in the operating room — that will appear on your actual bill for a hospital stay.
Moreover, if you are a Blue Cross customer, for example, who is paying the full charge out of pocket for an outpatient hospital procedure — maybe you have not yet reached the deductible limit or maybe that procedure is not covered under your policy — then it is still not clear whether you will get the deeply discounted Aetna prices, the inflated posted prices or whether it will be something in between. You can only find out once the procedure has been done.
If Republicans really wanted patients to take more responsibility for their health care, they would fix all that — fix it by insisting that doctors, hospitals, pharmacies and other providers make all their prices for all classes of customers readily available at the front desk and on their websites. But if you look through the 123 pages of the Republicans’ American Health Care Act that was rammed through two House committees this week before anyone could digest it, there’s nothing about any of that.
Nor is any mention of quality metrics. Obama’s Affordable Care Act included a big push for the government to do what is known as “outcomes research,” using millions of patient records to determine what operations, what drugs, what tests were most effective in treating various conditions. But at the insistence of Republicans, researchers cannot consider price in their analysis, making it impossible to determine which offers the best value. The Republican bill leaves this prohibition in place. What it does do, however, is to repeal the small tax on group health insurance that funds outcomes research.
Hospitals and doctors are of two minds about quality measures. They support them in general, but whenever one is ready to be rolled out, they question the fairness and accuracy. When CMS recently launched a Hospital Compare website that rated all hospitals from one star to five, the American Hospital Association complained that the rating system, based on 64 different quality measures, “raises more questions than it answers.” The American Medical Association raised similar objections to a CMS star ranking for doctors, complaining the results were “distorted” and “inaccurate.”
For his part, Tom Price, the new secretary of health and human services and a former surgeon, once sponsored legislation in the House to restrict a national database from compiling information about malpractice judgments and hospital disciplinary actions against individual doctors. Lord knows we wouldn’t want that kind of information to get into the hands of value-conscious patients.
When it comes to transparency, health insurers aren’t a whole lot better. The contracts between insurers and medical providers prevent either party from disclosing negotiated prices. Both sides insist on price secrecy, citing the business imperative to keep pricing information from competitors. And don’t hold your breath waiting for insurance companies to include quality ratings on those lists of doctors, hospitals and medical labs that are in their provider networks.
What Republicans don’t understand, or can’t admit, is that without price transparency and quality measures, you can’t have a “patient- centered” or “patient-directed” health-care market. Instead, what you get is the provider-centered and provider-controlled market that we have today.
Pearlstein is a Post economics and business columnist. He is also Robinson Professor of Public Affairs at George Mason University.