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Healthcare Costs 'An Abomination' Says Senate Finance Committee Chair

Margaret Dick Tocknell, for HealthLeaders Media, June 19, 2013

Can we return the principles of the free market to healthcare pricing?
"I'm not sure we ever started from that place," said Brill. "We certainly have slid far away from it." He pointed to Medicare as a countervailing payer power to the most concentrated healthcare provider. "It does an awfully good job. It's run mostly by the private sector, contracted out, and demonstrates that if you have one really big buyer in the marketplace it can serve to address the accumulated power of the providers."

Should the chargemaster be replaced?
Delbanco stated that the recent public release of chargemaster data was a great education for all about "how much variation there is [among hospitals] in the charges much less what people end up paying. What we need to work toward, and this will take a lot of work and time, is understanding exactly what the underlying costs are of delivering care and what cost it takes to deliver high quality care."

She noted that most hospitals and health systems "really don't know what it takes in terms of cost to deliver a unit of care." Without that knowledge, she said, it would be impossible to arrive at a "rational system to decide how much a procedure should cost."

What about consolidation's effect on pricing?
Sen. John Thune (R-SD) expressed concern that the coordination and integration of healthcare is providing an incentive in the market for consolidation and translates to higher costs. "What areas of anti-trust need to be re-evaluated if this trend continues to help put downward pressure on prices?"

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4 comments on "Healthcare Costs 'An Abomination' Says Senate Finance Committee Chair"


A. Duane Seabury (6/19/2013 at 3:58 PM)
Senator Baucus, I have been in healthcare for more than 35 years. The biggest problems have been created by Congressional action with no understanding or appreciation of the healthcare industry. Like the post office and social security, Congress is "managing" us right out of business. Decision one needs to answer the questions of fee for service or socialized medicine. You can't have it both ways. Once that question is answered then steps can be taken to make it happen. Look at the history going back to Medicare's initiation; take a hard look at Hill Burton; dissect the Medicaid program and at least try to understand the route that was taken by Congress to deliver us to this point. You need to be speaking to healthcare "experts" without skin in the game and you need to show the insurance lobbyists to the door. Oh...while your at it, take some time and actually define the calculations that will be the standard for quantifying and discussing "costs". So far, I haven't seen anything more than a broad brush on "rising healthcare costs".

Will Aclin (6/19/2013 at 2:33 PM)
It's true that nobody actually pays chargemaster rates, but hospitals have no problem billing those rates to uninsured folks and then creating financial chaos when they can't pay. While people with good insurance pay next to nothing for the same services (and their insurance company negotiates a rate less than a third of the chargemaster rate). The 2 major negatives about the chargemaster for me are these: 1) it's good at creating unnecessary financial chaos for the uninsured, and 2) these are the same "rates" that get applied to "Charity Care" reports for US hospitals (for-profit and non-profit). Doesn't seem quite right if you ask me.

Amanda Holt (6/19/2013 at 12:38 PM)
The "chargemaster" concept has become an irrelevant price list and it's "transparency" is only causing consumer concern and distrust of health care providers. You call for transparency? Then why don't insurance company's divulge their contractual rates to their participants so insured individuals can see exactly what their monthly premiums are NOT paying for? Why don't we fix the system so insurance companies actually pay for services and supplies that are rendered based on geographical costs of providing care rather than forcing providers to keep ramping up the "chargemaster" in the hopes of getting sufficient payment for service - if they get payment at all? CMS is the lowest paying institution and, yet, they have the most control over health care functions and regulations? How has our capitalist society allowed this to happen?