This would also be a big, big gain for insurers! Most insurers understand that hospital pricing across the country can vary widely and currently have a sort of one-size-fits-all pricing policy to cover those variances (beyond individual qualifying factors). By making prices more transparent and holding hospitals accountable for those prices, insurers would have good recourse to lower premiums for individuals and businesses with much of that pricing uncertainty removed.
Before you get too excited…
Remember to keep in mind that there’s another side to this story.
For one, hospitals’ public image may be greatly improved, and, if they happen to be the low-cost leader in their town, they could see a big boost in business from greater pricing visibility. Then again, a lack of transparency is what makes hospitals so incredibly profitable at the moment. Without an easily accessible database that allows consumers to price and compare procedures from multiple hospitals at once, most patients in need of medical care simply choose the hospital closest to them. Hospitals might be dissuaded from changing what is now a perfectly profitable practice.
It’s also not a slam-dunk win for insurers, either. Transparent pricing would eliminate a lot of the uncertainty they now deal with across the U.S. with regard to pricing, but there’s absolutely no way these insurers can take into account the ongoing difficulty in predicting the future care needs of their members with any real accuracy. The medical uncertainty of their members alone could prevent premiums from dropping in any meaningful manner even if transparent pricing were introduced.
Finally, there’s the question of whether consumers would use pricing transparency to their benefit. Sure, there are plenty of coupon clippers in our society looking for a good deal, but in the Kaiser Family Foundation’s March poll we learned that 48% of the Americans who were polled has heard “nothing at all” about the status of whether an insurance exchange was being set up in their respective state. The information might be out there, but it’s either difficult to get or consumers are too indifferent to seek it out.
The push for reform
Just as we’ve seen from the beginning with Obamacare, it’s filled with a mish-mosh of positives and negatives. While I wouldn’t discard the negatives discussed above by any means, consumer sentiment surrounding outrageous medical care costs has existed for decades; so, if anything, the CMS’ report is only bound to give supporters of the PPACA, and those who demand health-care reform, a big boost. It still remains to be seen if this bill has all the necessary tools capable of keeping health-care inflation costs under control, but it appears that the CMS’ cost report has firmly lit a fire under the need for ongoing health-care reform and has given Obamacare added momentum as we track closer to implementation on Jan. 1.
The article This News Is Bound to Give Obamacare a Big Boost originally appeared on Fool.com is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool recommends UnitedHealth Group.
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