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Obamacare’s “Bronze” Dead-End: Hidden Prices

Obamacare Bronze Plans
Ask Consumers to Shop
for Prices They Can’t Find

One of the biggest obstacles to Obamacare’s success as healthcare reform isn’t a faulty website or the cancellation of junk health plans, but lack of consumer access to hospital prices. Without it, price competition among hospitals will remain an elusive goal.

And without price competition, more Americans will be priced out of healthcare – at least elective healthcare – even with the lower premiums Obamacare will provide to millions of low-income Americans.

That’s because most of that low-cost health insurance will be “bronze” health plans that require subscribers to pay much of their high deductible payments before their insurance coverage kicks in – meaning many elective healthcare needs will continue to go untreated.

And while it’s true that those with incomes at or below 250% of the federal poverty level can get additional subsidies for their out-of-pocket costs under Obamacare, they have to buy higher-premium “silver” health plans to be eligible for these subsidies.

It’s likely that only those with multiple chronic medical conditions needing intense medical attention will be so motivated – and even many of them will forego the higher monthly premiums of silver health plans because of personal financial constraints.

And with hospitals getting more aggressive about collecting payment from patients before even scheduling elective procedures, hospital prices will remain a major obstacle to patient access to needed healthcare despite Obamacare’s inroads.

A Dead-End for Obamacare

One area in which Obamacare fails to make inroads is that of hospital pricing. In a system in which the costs of our healthcare are essentially hidden from patients/consumers, those costs – or rather, prices – need to be unveiled for all to see BEFORE making decisions about where to receive their elective healthcare.

This is impossible if prices aren’t disclosed, creating a virtual “dead-end” for Obamacare’s ultimate success if hospital pricing remains in the dark.

Despite right-wing accusations that Obamacare is socialism, it’s actually a very market-based approach to healthcare reform. And markets require price transparency to work efficiently. They also require educated consumers able to see what products and services cost so they can shop among their suppliers for the best combination of price and quality (i.e., value). 

Unfortunately, while Obamacare does much to improve transparency of health plans, it does little to promote transparency of medical prices. Some states, however, have begun efforts to force better price disclosure – meaning any price disclosure – by hospitals.

However, only four states earn a partial “A” rating for either price or quality disclosure, according to the Health Care Incentives Improvement Group. This is significant because the high-deductible “bronze” health plans that will proliferate under Obamacare expect consumers to shop for better prices

One of these four states is Massachusetts, which earned an “A” for price disclosure (and an “F” for quality disclosure). Yesterday’s Boston Globe described how that state’s new law requiring insurers and providers to disclose prices for a range of medical services is unfolding. Insurer disclosures even include how much of a person’s deductible has already been met and what their own out-of-pocket cost will be for the test or procedure being considered.

While this is pretty basic stuff in most of our economy, in the buttoned-up world of healthcare pricing it’s pretty revolutionary stuff. 

Unfortunately, Massachusetts is very much an outlier when it comes to requiring disclosure of hospital prices. And that’s a very big problem for Obamacare nationally.

Don’t Confuse Higher Prices
With Higher Quality

Not that greater price transparency will be a panacea, as this report from The Commonwealth Fund explores in detail. But it should help to get patients thinking more like smart consumers of healthcare services that are often overpriced and of poor quality. Over time, they’ll come to see that – unlike most other markets – higher prices in healthcare don’t always translate into higher quality.

Indeed, as I explain in Our Healthcare Sucks, it’s often the exact opposite.

Which means ready access to hospital pricing could help consumers steer clear of overpriced hospitals not just because they’ll be stuck with higher hospital bills, but because they may also be at greater risk of unneeded medical interventions that may harm more than their budgets.

But Obamacare has left this crucial variable to the discretion of each state. And as we’ve already seen with both health insurance exchanges and Medicaid expansion, many states will do everything possible to thwart Obamacare’s success.

As such, hospital pricing is likely to remain under wraps for most Americans for the foreseeable future. And this, unfortunately, may prove to be Obamacare’s ultimate undoing.

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5 Awesome Comments So Far

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  1. Donald Quixote
    January 15, 2014 at 1:05 pm #

    The thing that frightens me the most about Obamacare is that because healthcare costs are so high, people are going to wait longer and longer to go see their doctors. This terrible because instead of getting treated right away, the patient could be getting sicker and the hopes of getting rid of an illness instantly rapidly decline. It also makes it harder to catch serious illnesses before they can spread and do serious damage, such as breast cancer.

    • John Lynch
      January 19, 2014 at 4:56 pm #

      Well, my latest post points out that healthcare costs aren’t high because of Obamacare. Obamacare’s just making more people aware of how high they’ve become independent of Obamacare. Your concern is valid, Donald, but – as I put it in the post (“The 3 WTFs of American Healthcare”) – you’re “shooting the messenger” by blaming it on Obamacare. We’ve had healthcare costs at twice that of other developed countries for decades – before anyone ever heard of Obama. And we’ll have them for decades to come, so the legitimate concerns you express will only compound over time – but not because of Obamacare.

  2. Stephy
    January 4, 2014 at 5:55 pm #

    I keep hearing horror stories from obamacare. I hope it gets worked out. It seems like the middle class might end up with higher payments.

    • John Lynch
      January 5, 2014 at 9:25 pm #

      Many will end up with higher payments, Stephy. Many on the lower end of middle income will be eligible for tax subsidies that will lower their premiums and maybe their out-of-pocket costs for co-pays and deductibles as well.

      The biggest impact, though, may be in how we use the healthcare system – which is rampant with inefficiency, fraud and medical errors that cause more premature deaths than most diseases.

      Hopefully, renewed attention on our healthcare costs will lead to a new consumer movement among patients to finally take control of their medical decisions and stop agreeing to expensive and dangerous procedures they don’t really need – because that’s the only real answer, and it’s nothing the government can do for us.

  3. Alysha
    December 27, 2013 at 7:28 am #

    The basic minimal services which a health plan must cover, also known as essential health benefits, as mandated by the affordable care act, include doctor visits, other outpatient care such as day surgery, hospital care, emergency services, prescription drugs, maternity care, mental health care, substance abuse services, rehabilitation, laboratory tests, pediatric services, and preventive or wellness services. Thanks for your information – I learned something new from this post.

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