The “Right to Shop” for Health Care
Anyone who has undergone a medical procedure knows it is very difficult to figure out how much an insured patient will pay out-of-pocket. It is often not clarified until months after the procedure, when a flurry of incomprehensible paperwork from insurers, doctors, labs, et cetera, has landed in the patient’s mailbox.
(Personal aside: A couple of years ago, my health insurer encouraged me to go paperless, and I signed up for electronic messages about claims. It was so confusing, I went back to paper after a few months. At least you can scrunch up a letter and throw it across the room with an anguished scream, which you don’t want to do with your computer.)
This problem has led to a bunch of state laws attempting to impose “price transparency” on medical providers. As I explained previously, they do not work, because relationships between insurers and providers inhibit transparency. Medical providers’ “customers” are insurers, which pay most of their claims, not patients. Further, the real problem with medical prices is not that they are opaque, but that they are not formed in a normal market process. Instead, they are negotiated by third-party bureaucracies.
“Right to Shop,” a proposal developed and championed by the Foundation for Government Accountability, takes a different approach to the problem. As described in Forbes by Josh Archambault, the Right to Shop is pretty straightforward. State law would require medical providers to give good faith estimates of charges for procedures. Insurers and in-network providers would be required to share their negotiated charges with patients. If a patient gets a procedure at lower cost than the negotiated charge, the insurers must share some of the savings with the patient.
Mr. Archambault reports Right to Shop has already succeeded in New Hampshire, where Anthem Blue Cross implemented it for state employees. In 2015, it saved a total of $12 million, of which one million dollars was paid out to patients. It is not clear who benefitted from the $11 million balance. It would be good to know how much went to taxpayers and how much to the insurer! Nevertheless, it is a step in the right direction.
Right to Shop would impose some reporting and compliance burden on both insurers and providers, which is difficult to endorse. Further, it is easy to underestimate insurers’ and medical providers’ commitment to the status quo, which benefits them because it causes above-market prices. They will be very committed to undermining the Right to Shop.
On the other hand, because it is a state-based initiative, the law can be tweaked and it will be easier to learn how to improve it than if it were imposed nationally. Right to Shop will not fix everything in our overly expensive health system, but it is a positive proposal that would have an impact in the right direction.