No Incentive or Options for Patients to Shop Around for Medical Care Results in Higher Insurance Premiums

This is the second of a ten-article series that examines why health care and health insurance costs are higher in the United States.

Ever had medical procedure done in the USA? If yes, did you know what your real medical treatment bill was going to be? Did you know that even after the medical care was completed and you were discharged?

Chances are you did not, especially if you are insured by your employer! Don’t be embarrassed…

The US system of medical care is such that the patient in most cases does not know what the hospital or the doctors are being paid for providing the service. The patient usually only knows the co-payment or co-insurance amount. Depending upon the type of insurance plan, this amount could be just a fraction of the total amount, a fixed amount or maybe zero. This results in the end consumer (the patient, in this case) not getting an incentive or option to be a “smart shopper” for medical care. This adds to the inefficiencies in the system and many times the patient ends up getting medical service at higher prices in spite of there being more economical options.

For example, the charge for visiting Emergency might be $200 and the charge for a regular physician visit may be $100 to the insurance company. Many people when deciding to visit one over the other don’t have the charge in mind (as they don’t know it or financially its the same for them). They choose the convenient option. In such cases, non-emergency patients also end up visiting the ER and inflating the charge for the insurance company.

Another example is the case where there are more cost-effective treatment and surgery options available at overseas hospitals. Treatment at many international hospitals results in 60 to 90% savings on USA costs. Insurance companies can reduce the medical cost to them by allowing patients the option of overseas medical treatment.

This is by providing the patient first the option, then adding an incentive to to visit overseas where there is more affordable medical treatment. With Medical Tourism becoming a global phenomenon, this is a very viable option that insurance companies, especially self-insured companies need to look into to reduce costs (and ultimately passing the savings to the consumers).

To summarize, smart insurance plans with smart options that would involve the end consumer is one of the things that can help in reducing health insurance and medical costs. Another thing that can be done is the education of the insured on the impact of their health care choices.