Here’s a costly pop quiz: If you’re delivering a baby at, let’s say, HCA HealthONE Rose Medical Center in Denver, how much is it going to cost?
If you answered “It depends” or, ultimately, “I don’t know,” you win the game but also understand one way consumers lose in the healthcare system.
Unlike at your local coffee shop or car mechanic, there is almost never one price that something costs in healthcare. A standard vaginal childbirth without complications at Rose can cost more than $11,000 or less than $6,000 depending on what insurance coverage you have, according to figures posted on the website ColoradoHospitalPrices.com.
This is common across hospitals and across different types of care: The same procedure. The same circumstances. The same hospital. And a massive price range. Imagine if Starbucks did that.
“I call it an aggregate monopoly,” said Colorado U.S. Sen. John Hickenlooper.
It’s not a monopoly in the literal sense, but, Hickenlooper said, the players in the healthcare industry “are all working together to protect the status quo and this lack of transparency because they realize to some extent that gives them the benefits of a monopoly.”
To address this, Hickenlooper, along with Kansas Republican U.S. Sen. Roger Marshall, are sponsoring a bill called the Patients Deserve Price Tags Act to increase transparency around hospital pricing. The bill passed out of committee last week with bipartisan, near-unanimous support, and next heads to the Senate floor.
The bill would strengthen and expand on existing transparency rules requiring hospitals to post their prices in ways that people can understand them and that data-analysis tools can crunch them. It would also require that patients receive an itemized statement of what services were provided and how much they cost.
The bill proposes stiff fines on hospitals that don’t comply. And it would prohibit hospitals that don’t provide an itemized bill to a patient from pursuing that patient for medical debt. The goal is to make healthcare pricing simpler and easier to understand for everyone.
“What is so hard about healthcare that we can’t simplify?” Hickenlooper said.
This may sound incremental, but to Hickenlooper it is a first step toward achieving more ambitious goals in reforming the healthcare system.
By making prices more transparent, that could encourage consumers — and employers, whose budgets are increasingly burdened by rising healthcare costs — to shop around. A more competitive marketplace could encourage hospitals and other healthcare providers to try to gain an advantage by offering lower prices. And those lower prices could reduce the amount Americans and the government spend on healthcare, leading to savings that could be put to other uses.
Hickenlooper has been doing the napkin math out loud for months — including at his primary night victory party earlier this month, when he started spitballing numbers in his victory speech before a crowd of supporters eager to get to the drinking: The United States spends $5.7 trillion per year on healthcare. Out of that, at least 25% goes to covering administrative costs. Cut the prices, trim the overhead, simplify the system and you could end up with hundreds of billions of dollars a year to invest in insurance and affordability programs.
“Ideally, I think our goal is to begin marshaling those savings toward expanding coverage,” he said. “This is the foundation for how you get to universal coverage.”
Not everyone is so convinced. The reason is because providing medical services, at least right now, isn’t like slinging coffee or fixing a muffler.
Let’s go back to Rose Medical Center. It turns out that delivering a baby isn’t just a single, itemized thing to put a standard price on.
There are more than 20 billing codes listed in the ColoradoHospitalPrices.com database for vaginal delivery, with different ones being used based on the unique circumstances of each birth, as well as the preferences of the particular hospital and the particular insurance company involved.
Sometimes insurers have negotiated a flat rate; other times it’s a per-day rate based on how long the mother stays in the hospital afterward. Sometimes it’s a combination of both.
Labor and delivery charges make for a good case study on pricing because they are relatively shoppable — in most cases, patients know in advance they will need the services and could have time to compare prices. But most healthcare is not shoppable.
One study found that only about 36% of total healthcare spending could be considered shoppable. The rest are the sprained ankles and need-it-today prescriptions that don’t typically allow time for price comparison.
On top of that, most people in America are covered either by Medicare or Medicaid — which set their own prices across hospitals — or by a private insurance company with a coverage network that limits a patient’s choice of hospitals.
“I don’t want people to think that this fixes the problem,” U.S. Sen. Rand Paul, a Kentucky Republican, said last week just prior to casting the lone vote against the bill in the Senate Health, Education, Labor and Pensions Committee. “When you mandate transparency on prices that are fixed, it doesn’t change the situation.”
An analysis by the Center on Health Insurance Reforms at Georgetown University was ambivalent about the bill.
“Price transparency is considered a relatively weak cost-containment strategy,” the report’s authors wrote. “Nonetheless, ensuring that consumers can readily access what their health care will cost in advance is necessary to inform their decision making and long overdue.”
Despite this skepticism, Hickenlooper said he’s encountered very little dissent within the halls of Congress.
“It’s such common sense,” he said.
Nearly a quarter of senators are signed on as cosponsors of the bill, an eclectic mix that unites liberal Massachusetts Sen. Elizabeth Warren with Florida Republican Sen. Rick Scott, by some measures one of the most conservative members in the body.
The bill has charged through committee without significant changes, despite some opposition from healthcare industry groups like the American Hospital Association.
Even if the Senate passes the bill, the House of Representatives must also pass its own version, after which the two bills would need to be reconciled. If the measure makes it to President Donald Trump’s desk, Hickenlooper is optimistic the president will sign it, as Trump has previously been supportive of transparency efforts.
“We’ve got enough momentum,” Hickenlooper said, “that we can really hold the line here.”