The Kaiser Family Foundation has published a new one analysis recently concluded that a staggering 100 million Americans have medical debt, 41 percent of the country’s adult population. This crushing debt burden surpasses previous estimates because it includes medical liabilities held by informal loans and credit cards that do not show up in other analyses.
This statement shakes your conscience, regardless of your political position. It’s perhaps the best testament to America’s predatory health care system and the need for immediate reform to help ordinary families avoid financial ruin. This debt burden is particularly high during historical inflation, when real wages and living standards fall.
Some policymakers point to the widespread financial devastation caused by overcharging in healthcare to call for the socialization of healthcare into a Medicare-for-All system. However, there is a much simpler solution to protecting patients from medical debt while expanding access, choice and competition: price transparency in healthcare.
Actual upfront pricing gives healthcare consumers, including patients, employers and unions, the ability to avoid price gouging for the more than 90 percent Healthcare expenses not intended for emergencies. Correct pricing allows patients to choose high-quality, lower-cost hospitals and health insurers, have recourse when overcharging occurs, and enjoy the peace of mind that their treatment will not result in personal bankruptcy.
Under the opaque healthcare status quo, hospitals and health insurers blind patients to prices and then dump enormous bills on them that they would never have agreed to, often weeks and months after receiving treatment in the mail. As a result of this dynamic, care and coverage costs have skyrocketed and are increasing more than twice the inflation rate. Hospitals now charge an average of seven times their care costs.
The average annual premiums for employer-sponsored family health insurance are $22,221 per year with no deductible. This health care overload is depressing workers’ wages.
Imagine the outrage if any other business, from your neighborhood dry cleaner to your auto mechanic, were involved in such egregious billing practices. Vanderbilt University health economist Larry Van Horn states, “Not even in the darkest corners of the market like payday loans do we require consumers to pay prices that are not identifiable upfront.”
There’s a reason the only industry that routinely wreaks financial havoc is also the only one with hidden prizes.
Knowing the prices will put an end to inflated fees, upcoding, billing fraud and the resulting debt. Hospitals and health insurers that engage in such practices are bypassed in favor of those that offer quality care at fair market prices. Consumers can compare their employer plans to alternatives and reject outrageous negotiated rates. Competition will reverse runaway costs and make prices affordable, as is the case in almost every other sector of the economy.
This consumer-friendly, price-transparent healthcare revolution has already begun. On January 1, 2021, federal hospital price transparency will be introduced Rule went into effect requiring hospitals to publish their discounted cash rates and any negotiated rates by insurance plan. On July 1, a health insurance price transparency Rule comes into effect, prompting insurers to publish their historical claims data and secretly negotiated rates so consumers can access up-to-date upfront prices wherever they seek treatment.
Unfortunately, the hospital rule has been marred by widespread non-compliance. According to a recent to learn through PatientRightsAdvocate.org, only 14.3 percent of hospitals across the country follow it. Hospitals willfully break the law to perpetuate greed for profit by keeping consumers in the dark. Fortunately, the Department of Health and Human Services finally did began Imposing fines on non-compliant hospitals a year and a half after the rule went into effect. Consistent enforcement of this rule and the insurance order can make this consumer-friendly price transparency vision a reality.
If all healthcare and cover prices are known, patients and employers will not tolerate the payment 10 times more for the same care as the person in the bed next to them. An active, competitive healthcare market will emerge based on decisions and financial security. Patients can proactively avoid most instances of medical debt and take control of their health and wealth, ending this national embarrassment.