With the recession and rising healthcare costs, many Americans are struggling to keep healthy. By 2006, 19 percent of Americans spent more than 10 percent of their before-tax income on healthcare, according to a study published in last month’s Health Affairs. Fidelity Investments estimates that a U.S. couple retiring now will need approximately $250,000 to cover medical costs.
Robert Hendrick, co-founder of IT company change:healthcare, blames the fractured state of our healthcare system on a variety of factors: government policy causing ripples in the healthcare industry, a lack of incentive for medical providers to improve efficiency, employers who are out of touch with the cost of healthcare, insured consumers who are uninformed about medical expenses and willing to throw away $20 on a co-pay, and insurance companies that keep their reimbursement rates a secret. “There’s a complete and total disconnect all along the system,” Hendrick told the Sentinel. “There’s room for everybody to take blame, and there’s room for everybody to improve.”
Often, consumers have no idea how much a given medical procedure costs until they’re hit with the bill. Insurance companies and healthcare providers may not give the information out readily, and consumers might be unaware of the wide range in prices. Hendrick gives the analogy of going to the grocery store and buying milk without knowing how much it costs. You might pay $20 for that milk, not knowing that the store down the road sells it for $3. “I can’t imagine a single situation where you’re better off not knowing the price,” says Hendrick.
Online cost estimators such as change:healthcare can help consumers take charge of spiraling healthcare costs. Started in 2006, change:healthcare is on a mission to cut through the fog surrounding healthcare costs. The company offers a “Savings Engine” that identifies the best prices for healthcare services and prescriptions from different providers. The system also alerts users to money-saving opportunities that are tailored to the individual’s needs. Hendrick says that change:healthcare promotes millions of dollars in savings annually.
Insurance payer UnitedHealthcare (NYSE:UNH) recently announced improvements to its Treatment Cost Estimator application. Members can view physician-specific pricing in more than 400 markets and information on 116 diseases, 90 medical procedures, and more than 500 services. The application also lets the patient know what their payment will be under their particular insurance plan.
Another insurance provider, Humana (NYSE:HUM), offers an assortment of tools to help patients cut healthcare costs. The Compare Hospitals tool allows members to make side-by-side comparisons of medical facilities based on estimated costs, treatment outcomes, and more. The Family Health Budget and RxCalculator tools can help consumers project their healthcare and pharmacy expenses.
Aetna (NYSE:AET) gives out cost information for more than 70,000 physicians in the United States. Members in Connecticut, Maryland, northern Virginia, Washington, D.C., and several other regions can view pricing info on 30 commonly used services and 30-day hospital readmission rates.
NewChoiceHealth allows consumers to compare costs for common medical procedures such as MRIs, mammograms and more. Patients have over 20,000 medical facilities and more than 400 procedures to choose from.
Savings Advisor, developed by pharmacy benefit manager Medco Health Solutions (NYSE:MHS), gives patients a list of generic and lower-cost drug options based on their insurance coverage. A study conducted by Medco found that 14 percent of members who used the Savings Advisor switched to lower-cost alternatives, a 58 percent increase in conversion over the group that did not use the savings tool.
Medical cost estimators let patients take responsibility for their healthcare with just a click of the mouse. As healthcare costs continue to escalate, we will probably see an increasing number of patients comparison shop for medical services as they would for other necessities such as food or clothing. We would be happy to hear about additional online tools that can help patients save on healthcare.