I am a supporter and follower of Marshall Allen, a Pulitzer Prize finalist and author of Never Pay the First Bill, which is the foremost consumer guide to affordable health care. If you as an employer have any interest in lowering your employee health costs, I highly recommend buying this book. You should also buy one for every employee on your health plan.
. You and your employees have been conditioned to be passive and apathetic about your health plan. When we have hospital visits, we get shocked by the enormous amounts we see on the E.O.B. but we are accustomed to accepting it and believe there’s nothing we can do. And because of this you and your employees don’t realize that you’re paying thousands more than you should. According to the Kaiser Family Foundation in the last 10 years worker’s earnings increased 27% while family health plan premiums increased 55% and deductibles increased 111%. The result of this is 1 in 5 of your employees have a medical debt of at least $2,000. You might be surprised to know that many hospitals aggressively pursue that debt without ever having to account for their unfair pricing practices and ruining your employees’ credit rating. And the increasing cost of your health plan and increasing deductibles are forcing some of your employees to decide to skip needed medical tests and procedures.
In a presentation recently Marshall made three points of how hospital pricing deceives us:
· We don’t see the prices
It’s common to receive services at a hospital without knowing the cost or seeing a bill until after you’re dismissed. This is insane. We don’t accept hidden prices in any other facet of our life. Why do we accept it in health care? A federal law was passed last year requiring hospitals to publish their rates for services, including their negotiated rates with all of the insurance companies and PPOs, as well as the rate they would accept for a cash payment. In 2021 one of the three local Rockford Hospitals published the data in a format the average consumer could use. In 2022 an additional local hospital published the data in a consumer-friendly format. The third hospital still only provides the data in machine readable format, which is useless unless you’re a data engineer.
· The prices are not based on the actual cost of goods
The prices you and your employees pay for care at the hospital is almost never based on the actual cost of providing that care. As a business owner you set your prices based on what it costs to provide your product or service and then add a profit margin you think is fair, and the market will bear. With the exception of a handful of hospitals in this country the majority have no idea what the cost of providing a particular service is because they do not practice cost accounting. Surely, they know the annual cost of services provided and the amount they collected in total, but that’s not cost accounting. The University of Utah Health Care System practices cost accounting. By painstakingly studying the cost of labor and materials they know that care provided in their emergency room costs $0.82 per patient per minute and orthopedic surgery costs $12.00 per patient per minute. Most hospitals set prices through secret negotiations with insurance companies and PPO Networks based on market share and name recognition/popularity. And then that carrier or network will sell their health plan to you based on “discount off billed charges”. The worst kept secret in the industry is that the “billed charges” is a made-up number that no one ever pays and only exists to make the discount look bigger. This method of negotiating prices with insurance companies and Networks keeps hospitals from having to compete with each other in an open and transparent market. Prices have more to do with what the insurance companies want to set and almost nothing to do with what it costs the hospital to provide that service.
· Patients are tricked into paying more than they should
There is no ethical or logical reason that one patient should pay more than another based on what insurance company they are with. But because of the explanation provided in the paragraph above, it happens every day. An example of that would be the charge administered for a Level 2 Emergency Room visit in Rockford. According to the information found on their website the OSF St. Anthony charge for this visit is $684.00 if your health plan is with United Health Care and $390 if you’re with Cigna. If you’re a cash paying patient without insurance the charge is $44.00. The same service with SwedishAmerican/UW Health is $368.31 with United Health Care and $377.89 with Cigna. The cash price is $220.99. Comparable information is not available from Javon Bea Hospital because they only supply this data in a machine-readable format, which I don’t have access to. Your employees could be penalized based on the insurance company you chose. This is only possible by the hidden and deceptive practices between the insurance carriers and hospitals. It is in part why the rate of growth in health care spending more than doubled between 2019 (4.3%) and (2020 (9.7%), rising faster than consumer prices and inflation.
Regardless of your size as an employer, there are a multitude of ways you can fight this unfairness. The first thing you can do is kickstart your health care literacy by going to amazon and buying Marshall’s book today. The second thing to do is to call us and start a simple conversation on how you can plan a different strategy to your employee benefits that is based on proven techniques to lower your health plan costs (without additional financial risk) and increase your plan benefits to protect your employees from mounting health care debt while improving access to best hospitals and doctors based on credible data instead of TV commercials and billboards.