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.
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.