There is a Catch-22 (well, one of several) for health care consumers trying to manage medical expenses. This is especially galling if you happen to be in a so-called “consumer-directed health plan,” also known as a high-deductible plan.
Well, first you have to find out what that number is.
And there’s the rub.
The New York Times recently featured an article illustrating the confusion of hospital pricing. The take-away was that one had no idea and virtually no control over how much a “routine” procedure would cost, especially in an emergency situation. (Your appendix is infected and about to burst and you begin making calls to various hospitals asking for their average cost for an appendectomy? I think not.)
The reality is that we health care consumers comprise what economists call an “inelastic” market. Marketers call us a “captive” market. Defining these terms is best done by example: for a diabetic requiring insulin, the entity supplying insulin can charge as much or little as it pleases because the diabetic must have insulin to survive.
This is also known as a “sellers” market.
There are a few tools available to the cognoscenti (that would be you) to use which will give you an idea of the price range. Assuming you avail yourself of these tools, the next hurdle is figuring out what you’ll have to pay out-of-pocket. Many large health insurance companies indulge in a practice called “balance billing.” This euphemism refers to the practice of reimbursing the lowest amount possible (usually what Medicare or Medicaid would pay for the procedure), and throwing the remaining expense to the consumer to pay, even if it is in excess of your co-pay. This practice was supposedly outlawed, but of course there was a loophole in the legislation and a great sucking sound was heard as health plans availed themselves of it. And then there are systemic mistakes, such as software glitches which can cause your drug co-pay to spiral from a “mere” $200 to $18,000.
Yet another example of our dysfunctional health care system.
The takeaway from this post is that because of those varying prices, you can negotiate the amount you owe to the medical provider. Persuading the hospital to accept a smaller amount helps you in multiple ways: you exercise at least some control over your medical spending as you sort out the different prices charged for the same procedure, so you save money. What’s more, you gain a sense of empowerment that will stand you in good stead in the future.
*Latin: Let the buyer beware.