Policy: A Word About Transparency (Part Two)

I've always felt that comments from bright and thoughtful readers often get trapped in the shadow of many blogs and unfortunately, the ego of the blogger. As it is usually the readers of this blog who have wiser things to say than myself, I thought I'd be sure to highlight an especially thoughtful response I received this weekend. Only known to me as "BC" - the readers comments are found below:

BC said (my own comments are in bold)...

I think it would be enormously helpful if Medicare rates for all DRG codes were readily available on the CMS website. Consumers could at least then use that information as a benchmark for assessing the reasonableness of their own bills.

JD: Here! Here!

I do not think someone without insurance, even if wealthy, should have to pay more than a 15%-20% premium above Medicare rates.

JD: Yes...but CMS is also an imperfect pricing agent and can often grossly underpay on certain procedures.

Even when insurance is paying most of the bill, many policies have a lifetime benefit cap, so pricing does matter, at least for those of us who incur significant medical costs.

JD: Agreed.

For hospitals that believe they are low cost, or at least competitive, in their market and have a robust enough accounting system to determine with reasonable accuracy what their costs are,

JD: Which, unfortunately many do not (on both counts)...

...it could be a competitive advantage for them to provide some leadership on the pricing transparency issue. Especially with respect to outpatient services and inpatient surgeries that are scheduled in advance, pricing transparency should be easy to provide (including package pricing) if hospitals really wanted to move in that direction.

JD: Yes! And these hospitals are certainly the one's most likely to compete on price (rather than convenience or quality of experience). As an "early adopter" they will also likely gain considerable market share for leading the market amongst price discriminators.

Hospitals that perform a teaching function or provide care to an unusually large number of uninsured patients should be compensated for those costs via direct federal or state subsidy.

JD: I suspect similar to the current disproportionate share criteria used today...

If basic costs are uncompetitive, they should downsize or close.

JD: Ahhh, Friedman would be proud!

Thanks BC for such a thoughtful reflection...and to all you readers out there who take the time to leave comments!