The Kaiser Family Foundation has published a new analysis recently concluding that a staggering 100 million Americans have medical debt, or 41% of the nation’s adult population. This crushing debt burden exceeds previous estimates because it includes medical liabilities held through informal loans and credit cards that do not appear in other analyses.
This statement shocks the conscience whatever your political position. This is perhaps the best evidence of America’s predatory health care system and the need for immediate reform to help ordinary families avoid financial ruin. This indebtedness is particularly heavy in times of historic inflation when real wages and the standard of living decline.
Some policymakers point to the widespread financial devastation of health care overload to call for the socialization of health care in a Medicare for All system. Yet there is a much simpler solution to protecting patients against medical debt while expanding access, choice and competition: healthcare price transparency.
Real upfront prices allow consumers of health care, including patients, employers and unions, to avoid predatory pricing for the more than 90 percent health expenditures that are not intended for emergencies. Accurate pricing allows patients to choose quality and less expensive hospitals and health insurers, to have recourse in the event of over-billing, and to have the peace of mind that their care will not lead to personal bankruptcy.
Under the opaque health care status quo, hospitals and health insurers are blinding patients to prices, then blinding them with huge bills they would often never have accepted in the mail for weeks and months. after care. As a result of this dynamic, the costs of care and coverage have exploded, increasing to more than twice the inflation rate. Hospitals now charge on average Seven times their childcare costs.
Average annual premiums for employer-sponsored family health insurance are $22,221 per year, excluding deductibles. This health care overload suppresses employee salaries.
Imagine the outrage if another business, from your neighborhood dry cleaner to your auto mechanic, engaged in such egregious billing practices. Vanderbilt University health economist Larry Van Horn notes, “Even in the darker corners of the market, like payday loans, we don’t require consumers to pay indiscernible prices at ‘advance.
There’s a reason the only industry causing routine financial havoc is also the only one with hidden prices.
When the prices are known, the overcharges, overpricings, billing frauds and debts they cause will come to an end. Hospitals and health insurers that engage in such practices will be bypassed in favor of those that provide quality care at fair prices. Consumers can compare their employer’s plans to alternatives and dismiss outrageous negotiated rates. Competition will reverse exorbitant costs and make prices affordable, as it does in almost every other economic sector.
This pro-consumer, transparent pricing healthcare revolution has already begun. As of January 1, 2021, price transparency for federal hospitals to reign went into effect, requiring hospitals to post their discounted cash prices and all negotiated rates by insurance plan. As of July 1, transparency of health insurance prices to reign comes into force requiring insurers to publish their historical claims data and secretly negotiated rates so that consumers can access actual and up-front prices wherever they receive care.
Unfortunately, the hospital’s rule has been marred by widespread non-compliance. According to a recent study by PatientRightsAdvocate.org, only 14.3% of hospitals in the country follow it. Hospitals deliberately break the law to maintain profit by keeping consumers in the dark. Fortunately, the Department of Health and Social Services has finally started impose fines on non-compliant hospitals a year and a half after the rule comes into effect. Rigorous enforcement of this rule and the insurance order can make this consumer-friendly vision and price transparency a reality.
When all the prices for health care and coverage are known, patients and employers will not tolerate paying 10 times more for the same care as the person in the bed next to them. An active and competitive healthcare marketplace will emerge, based on choice and financial certainty. Patients can proactively avoid most cases of medical debt and take control of their health and wealth, ending this national embarrassment.