The U.S. health care system has a cost problem. There is little in the way of competition because third parties pay about 89% of medical bills, while patients pay the remaining 11%. Long before patients enter their doctor’s office, third parties have decided which tasks they will pay for and how much they will pay. Federal and state laws mandate certain benefits that health plans must pay, but the rules are subject to interpretation.
Americans are far more worried about which costs they can foist on their health insurance than finding the lowest price for cash. Even if you are paying cash because you have not met your deductible (and are unlikely to under Obamacare), there are few competitors offering deals for cash. The market is just too small. Only a portion of the 11% paid out of pocket is from people unburdened by insurance arrangements or those who have chosen to go outside their health plan arrangements. When patients pay only 11% of health care expenditures directly, it becomes more difficult for cash-paying customers to find a good deal.
I recently told the story of a family member who decided to go outside her insurance and pay cash for an ultrasound. It was a fair price. The same person decided to use her insurance to pay for a dermatology visit that she used to pay out of pocket. Flashing her insurance card ended up costing her more (out of pocket) than just paying cash. Now that the dermatologist has her insurance on file, he is unlikely to honor their earlier cash arrangement.
This brings me to a Kaiser Family Foundation (KFF) Health News article that was somewhat frustrating to me. A young mother told KFF Health News:
“My son was diagnosed with congenital CMV, a virus that can cause hearing loss. As part of this diagnosis, he will be required to have routine hearing tests every few months until he is 10 years old. I reached out to you because I wanted to know why my son’s hearing tests weren’t covered by our insurance and why we needed to pay for it.”
Baby Beckham’s hearing screenings were preventive care, which is supposed to be covered by law. Every hearing test cost them about $350 out-of-pocket.
I can understand this young mother’s frustration. She does not want her family to be out more than $1,000 a year for the next 10 years for frequent hearing tests that she believes should be free. She is at the mercy of prices at the clinic where she was referred. There were probably no discussions about options, what type of hearing test is acceptable and other facilities where it can be performed. A cash price would probably have been cheaper. Microsoft Copilot estimates the cost for hearing tests that range from zero to $250. Audiologists charge closer to the higher range. Comprehensive audiometry is $150. There are other specific tests costing less. It all depends on what the pediatrician is looking for. When the baby is a little older his options will likely expand.
This mother’s health plan may not view periodic hearing tests as a preventative service rather than a diagnostic one. While the former is free, the latter is subject to cost sharing. A good example is colonoscopies. Health plans must pay for colonoscopies without cost sharing if the doctor is following the U.S. Preventive Services Task Force recommendations for age and frequency. However, there must be no symptoms of bowel disease discussed as a reason for the test. Tell your doctor you have blood in your stool, and your colonoscopy just became diagnostic and subject to cost sharing. The same is probably true of baby Beckham’s periodic hearing tests. A diagnosis of congenital CMV means you are following up on potential complications of a disease, not screening for new one.
Most patients’ complications and frustrations are the result of the convoluted way we finance medical care in this country. The U.S. needs a more consumer driven health care system. That will only occur when more patients reach for their wallets when receiving care. Health Savings Accounts (HSAs) are a good start.
Read more at KFF Health News: Try This When Your Doctor Says ‘Yes’ to a Preventive Test but Insurance Says ‘No’