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August 01, 2005
Price Transparency helps those with Health Savings Accounts
The big promise of Health Savings Accounts (HSAs) is that they will help usher in a new era in which medical providers will finally have to compete the way every other business in America competes. This will benefit not only HSA holders, but all Americans.
The state of Pennsylvania has made hospital fees publicly available. Patients can now see that a heart bypass may cost from $10,000 to $80,000 depending on the hospital.
Getting prices on medical care is typically very difficult. Hospitals and doctors rarely advertise their prices. The result is that people don’t have any basis on deciding which provider to choose.
Individuals with health savings accounts are most in need of pricing information. These plans, which combine catastrophic coverage with a tax-exempt savings account, can carry deductibles over $5,000 for an individual.
It is expected that insurance companies, non-profit organizations, and other states will become more involved in making the cost of healthcare and hospitalization expenses more readily available. There’s actually a word for what every other business has always had to do in order to stay in business – compete on the basis of both quality and price.
When price competition enters the game, we can expect one major result – a reduction in prices. Healthcare prices have been rising rapidly for several years now. There are many reasons, but one of the biggest is that there has been no competitive pressure for hospitals, doctors, or pharmaceutical companies to charge reasonable prices.
Posted by Wiley Long at August 1, 2005 07:43 AM