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US Health Insurers Caught Negotiating Worse Rates Than For Those With No Insurance (nytimes.com)
Posted by EditorDavid on Sunday August 22, 2021 @04:34PM from the bad-deals dept.
In the U.S. healthcare system, "hospitals are charging patients wildly different amounts for the same basic services," reports the New York Times — citing an investigation into medical care costs at 60 major hospitals.
This year the U.S. government ordered hospitals to publish complete lists of the prices they negotiate with private insurers, "and it provides numerous examples of major health insurers — some of the world's largest companies, with billions in annual profits — negotiating surprisingly unfavorable rates for their customers." In fact America's government-run Medicare health insurance for senior citizens is negotiating much lower rates than the privately-insured patients are getting, the Times points out — sometimes paying just 10% of what the major health plans are paying.
"In many cases, insured patients are getting prices that are higher than they would if they pretended to have no coverage at all..." Until now, consumers had no way to know before they got the bill what prices they and their insurers would be paying. Some insurance companies have refused to provide the information when asked by patients and the employers that hired the companies to provide coverage. This secrecy has allowed hospitals to tell patients that they are getting "steep" discounts, while still charging them many times what a public program like Medicare is willing to pay. And it has left insurers with little incentive to negotiate well.
The peculiar economics of health insurance also help keep prices high. Customers judge insurance plans based on whether their preferred doctors and hospitals are covered, making it hard for an insurer to walk away from a bad deal. The insurer also may not have a strong motivation to, given that the more that is spent on care, the more an insurance company can earn. Federal regulations limit insurers' profits to a percentage of the amount they spend on care. And in some plans involving large employers, insurers are not even using their own money. The employers pay the medical bills, and give insurers a cut of the costs in exchange for administering the plan.
The shortest distance between two points is under construction. -- Noelie Alito