Healthcare Pricing
If you’ve ever opened a medical bill and felt your jaw drop, you’re not alone. The numbers often seem confusing and even unfair. You go in for a routine procedure, and a few weeks later, you’re staring at a statement that leaves you scared and unsure of what to do next. What are you paying for? And how did the hospital come up with these numbers in the first place? This is the problem of healthcare pricing, so let's demystify medical bills and healthcare costs.
Medical bills are composed of hospital pricing, insurance negotiations, and surprise/hidden fees. All hospitals are required to be transparent about their billing and post the prices of each procedure, surgery, or operation online. As a result, an MRI would cost the same amount at a particular hospital--but the price that patients pay depends on their insurance coverage. In fact, “hospital-insurer contracts determine the prices that insurers pay to hospitals for covered services.” However, although hospital-insurer contracts are an important element of the health system, these negotiations are shrouded in secrecy, leaving patients unsure of what their care will cost upfront. Lastly, surprise medical bills add on another layer of fees for patients. A surprise medical bill is a “form involving bills for services received from a health care provider or facility that [one] did not know was out-of-network.” These bills can appear on any statement but those regarding emergency procedures, as explained by the No Surprises Act, which protects those with health insurance.
Secondly, healthcare in the US costs more than in many other similar countries. In 2021, “the U.S. spent nearly twice as much on health per person as comparable countries.” Oftentimes, this is due to administrative costs. A 2019 study found that for every dollar the U.S. spends on healthcare, up to 30 cents goes to administration. Hospitals have to deal with mountains of paperwork, from patient forms to insurance claims, and all of that infrastructure costs money—all of which gets passed on to the patient. Furthermore, drug pricing also contributes to this cost. The US pays double for prescriptions compared to other countries because “U.S. pharmaceutical companies have amassed patents to prevent generic competitors from bringing cheaper versions to market.” Unfortunately, these companies justify this higher price to reflect research and development costs, an excuse for larger profits and higher costs.
_____________________________________________________________________
“What Is a “Surprise Medical Bill” and What Should I Know about the No Surprises Act? | Consumer Financial Protection Bureau.” Consumer Financial Protection Bureau, 7 Dec. 2023, www.consumerfinance.gov/ask-cfpb/what-is-a-surprise-medical-bill-and-what-should-i-know-about-the-no-surprises-act-en-2123/. Accessed 13 Oct. 2024.
Henderson, Morgan A, and Morgane C. Mouslim, DVM, ScM. “Facts about Hospital-Insurer Contracting.” AJMC, vol. 30, 12 Feb. 2024, pp. e59–e62e59–e62, www.ajmc.com/view/facts-about-hospital-insurer-contracting. Accessed 13 Oct. 2024.
“Price Transparency | Parkland Health.” Parklandhealth.org, 2024, www.parklandhealth.org/price-transparency. Accessed 13 Oct. 2024.
“What Drives Health Spending in the U.S. Compared to Other Countries? - Peterson-KFF Health System Tracker.” Peterson-KFF Health System Tracker, 2 Aug. 2024, www.healthsystemtracker.org/brief/what-drives-health-spending-in-the-u-s-compared-to-other-countries/#Healthcare%20spending%20per%20capita,%20by%20spending%20category,%202021. Accessed 13 Oct. 2024.
Putterman, Samantha. “Politifact FL: U.S. Pays Double for Prescriptions Compared to Other Countries.” WUSF , WUSF, 29 Mar. 2024, www.wusf.org/health-news-florida/2024-03-29/politifact-fl-us-pays-double-prescriptions-other-countries. Accessed 13 Oct. 2024.
