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There& #39;s an obvious culprit when it comes to America& #39;s sky-high health care spending: high prices.
But there& #39;s something less obvious, that& #39;s worth understanding a bit better: insurers do not have strong incentives to negotiate well on behalf of members.
A thread (1/8)
But there& #39;s something less obvious, that& #39;s worth understanding a bit better: insurers do not have strong incentives to negotiate well on behalf of members.
A thread (1/8)
You can actually see that really clearly in the story I wrote yesterday, about a woman who got a drive-through coronavirus test. She used her insurance, and they were billed $6,408.
Her friend paid cash and was billed $199.
https://www.nytimes.com/2020/06/29/upshot/coronavirus-tests-unpredictable-prices.html
(2/8)">https://www.nytimes.com/2020/06/2...
Her friend paid cash and was billed $199.
https://www.nytimes.com/2020/06/29/upshot/coronavirus-tests-unpredictable-prices.html
(2/8)">https://www.nytimes.com/2020/06/2...
Why does an insured patient end up with a bill that is 3,200 percent of the cash price?
Most of the difference doesn& #39;t come from the actual price of the COVID Test. It comes from the ER tacking on a bunch of *other* tests just for the patient with insurance.(3/8)
Most of the difference doesn& #39;t come from the actual price of the COVID Test. It comes from the ER tacking on a bunch of *other* tests just for the patient with insurance.(3/8)
The tests the insured patient got include Legionnaire& #39;s, herpes, enterovirus, a half-dozen others.
You can& #39;t do that to a patient paying cash. You tell them you& #39;re going to run a Legionnaire& #39;s test alongside COVID and they probably walk (or run!) away (4/8)
You can& #39;t do that to a patient paying cash. You tell them you& #39;re going to run a Legionnaire& #39;s test alongside COVID and they probably walk (or run!) away (4/8)
Insurers, however, are a better target.
They are managing a ton of claims. It is annoying for them to deal with complaints from members (ie "Why won& #39;t you cover this COVID test bill?"). It takes work to adjudicate what care is and isn& #39;t needed. (5/8)
They are managing a ton of claims. It is annoying for them to deal with complaints from members (ie "Why won& #39;t you cover this COVID test bill?"). It takes work to adjudicate what care is and isn& #39;t needed. (5/8)
So, an insurer can decide to just pay for all those tests and, tack a few more cents onto members& #39; premiums the next year. At the end of the day, they aren& #39;t spending their own money. They are spending other people& #39;s money. (6/8)
There& #39;s a paper from 2012 that I think about a lot, which essentially suggested insurers are a bit of a wimp when it comes to negotiations with hospitals. I think the $6,408 coronavirus test is the outcome of of that dynamic. (7/8)
https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2011.0920">https://www.healthaffairs.org/doi/full/...
https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2011.0920">https://www.healthaffairs.org/doi/full/...
