The Need for Cost Clarity

With consumers’ share of healthcare costs expanding, we need to do a better job making charges more transparent and more predictable 

My husband recently stubbed his toe. Badly. Badly enough that I encouraged him to go see a doctor. He was reluctant. While I suspected he’d rather just garner sympathy by complaining to me while limping around the house (just kidding, honey), his stated reason was all too familiar: “I have no idea what we’ll have to pay. They’ll want to do an X-ray, it might need surgery, and I have no idea what it’ll cost.” All true. We have good health insurance; but like most Americans, when we go to the doctor or have a procedure, what we will actually have to pay out of pocket remains a mystery. This is something that we can and should change.

As consumers we are shouldering more and more of the cost of healthcare. And the biggest increases are for those of us with employer-sponsored plans. According to an analysis of federal data by the Commonwealth Fund, deductibles in employer plans more than doubled between 2008 and 2017, from $869 to $1,808. Especially troubling, an accompanying Commonwealth Fund survey revealed that only 62% of adults were very or somewhat confident in their ability to afford healthcare.

More skin in the game 

So as consumers are paying more out of pocket, some may become reluctant to seek care (like my husband) or seek more information about what they will have to pay for the care they receive. Consumers are also armed with incredible levels of price transparency with other products—everything from hotel rooms to clothing to household items. With so much skin in the game, and the internet providing so much information, consumers’ expectations are changing when it comes to healthcare. 

Making the complicated simple 

The complexity of pricing in healthcare is well documented. Niall Brennan, CEO of the Health Care Cost Institute, a nonprofit that analyzes medical costs, suggests that healthcare costs are too high. As a recent Wall Street Journal article reported, a price of a C-section varied from $6,241 to $60,584 at one hospital. This all has to do with the vagaries of the agreements that hospitals sign with multiple insurance companies and government payers. In turn, each insurance company will have its own deductible and out-of-pocket schedules, which providers don’t have access to.

Removing unpredictability in pricing 

This gives providers the opportunity to offer added value for their patients, taking some unpredictability out of what is often a stressful transaction. In addition, it accelerates patient payment cycles which, as the patient’s share of the cost burden increases, is becoming more and more important. We’re not talking $50 co-pays anymore; it’s thousands of dollars per transaction. If necessary, providers can also help the patient plan for the expense, offering financing options, thus reducing unpaid bills. For the patient, it allows more informed decision-making and peace of mind.