Dunkin Donuts laid down a marker for price transparency—if you don't get a receipt, your order is free. Their prices are conspicuously labeled on the board and are pretty much the same from store to store.
The price of knee replacements, on the other hand, varies wildly, from about $13,000 to $75,000. But employers and consumers often don't have access to the prices and can't get a sensible, detailed receipt. Why is this OK?
Comparison shopping for healthcare is not for the faint of heart, which is one reason employers play such a big role. Employers choose which plans to offer their workers and how much employees pay. Many large employers take a more central role by “self-funding,” paying for workers' medical bills directly and customizing plans. Consumers are also getting in on the act with consumer-directed, high-deductible plans, where transparency at the retail level is even more important for informed decisionmaking.
When an employer is shopping for a health plan, one key differentiator is the prices that different plans have negotiated with providers. In the best-case scenario, employers would use their buying clout to pick the plan with the best pricing. In reality, employers are often in the dark, guided by brokers whose business model is built on this lack of price transparency.
The stakes are huge—this year, employers and their workers will pay close to $900 billion for coverage. A lack of transparency prevents healthcare purchasers from answering a basic question: What price are we paying and for what products and services?
If armed with receipts, employers will be in a better position to make decisions about their single largest benefit expense.
Any comparison of U.S. healthcare to other developed nations would have us asking why we pay the most and get far from the best. In every other part of our lives, we get a receipt for our purchase. When you spend $900 billion on something, you should demand one.
Dr. Joseph Smith is chief medical and science officer of West Health, an independent, not-for-profit medical research organization.
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