Doing a little too much on his bicycle, Tim crashes into a brick wall. He’s not overly concerned about it, but he decides to see the doctor. The doctor suggests a CT scan for his head at a nearby facility. Tim, ever the responsible patient, checks with his insurance to verify that the facility is in-network. It is. Tim gets the CT scan which reveals an uninjured brain and all is well.
Except that it’s not.
Just because Tim has health insurance and he stays in-network does not mean the healthcare prices are the same among those providers. Insurance companies have contractually negotiated rates with providers that can and do vary greatly. Walk into “Facility A” and Tim pays $1,100 for the CT scan. Walk into “Facility B,” and for that same procedure, with the same quality outcome, Tim only pays $300. The differences are really that extreme.
There are some 70 million CT scans that occur each year. Saving $200 per scan would be worth $14 billion. Then think of all the other procedures (i.e. MRIs, colonoscopies, mammograms, etc.) where the same dynamic is the status quo. These savings are available without any fundamental change to the healthcare infrastructure – patients simply need to go to more cost-effective providers.
Deductibles, the amount someone must pay before insurance starts paying benefits, are up 67% percent since 2010. In the recent past, the price difference between “Facility A” and “Facility B” may not have directly mattered to Tim. But now he is more likely to pay that cost out of his own pocket, and thus finding a cost-effective provider should theoretically be important to Tim.
That price difference always should have mattered to Tim’s employer where he, like 150 million Americans, got his insurance. Insurance premiums, which these employers partially, if not entirely, cover for their employees, continue to rise because healthcare costs rise. Plus, the largest employers in this country are self-insured meaning they, not an insurance company, are paying medical claims. Cost-effective choices by Tim are direct savings to a self-insured company.
This is where we return to awareness. The overwhelmingly majority of people don’t understand the most basic aspects of insurance, so expecting them to understand the arcane world of healthcare pricing is ambitious, even with incentives to price shop (for procedures that can be shopped) like higher out-of-pocket responsibility.
Simply providing an employee reason to shop isn’t enough. Simply providing an employee with transparency tools doesn’t work. Technology needs to be combined with human intelligence in a simple, understandable manner so optimal healthcare decisions can be made.
That’s what CaredUp does with text messaging. Learn more here.