Hey Tina! I love your humour. You write in a way that makes it easy to understand this topic.
Not sure if this is a naive question but why doesn't the government force them to release prices? Price transparency should just be the default by law.
Hi Justine! Thanks for your encouragement. :). It's not a naive question- it is funny to think about what prices we do and do not know in the economy. The legislation I referred to is working on having hospitals publish their "standard charges" for services. We might think this is like having the grocery store post prices on their tomatoes where everyone can see. However, as a consumer, we normally don't see the payments the grocery store agreed on with the tomato wholesaler. That's a private contract between the two parties. Same thing with your employer and your salary- it's not usually publicly available for anyone asking. The problem with "standard charges" is that the entity arranging the services isn't usually the patient, like someone browsing the tomato aisle. It is the insurance firm who is the third-party payor negotiating over a whole package of services with the hospital. Thus, private contracts come into play and it looks more like the tomato wholesaler and the grocery store than the grocery shopper walking through the tomato aisle. "Standard charges" become a bit more imaginary when each insurer has its own contract. It is something to consider whether the contracts in the health care part of the economy should be treated differently.
As a new subscriber, I love the play on words in your newsletter!
It is a herculean task to explain this complexity, but you do a great job of trying to untangle the serpentine knots.
I love how you put that!
Hey Tina! I love your humour. You write in a way that makes it easy to understand this topic.
Not sure if this is a naive question but why doesn't the government force them to release prices? Price transparency should just be the default by law.
Hi Justine! Thanks for your encouragement. :). It's not a naive question- it is funny to think about what prices we do and do not know in the economy. The legislation I referred to is working on having hospitals publish their "standard charges" for services. We might think this is like having the grocery store post prices on their tomatoes where everyone can see. However, as a consumer, we normally don't see the payments the grocery store agreed on with the tomato wholesaler. That's a private contract between the two parties. Same thing with your employer and your salary- it's not usually publicly available for anyone asking. The problem with "standard charges" is that the entity arranging the services isn't usually the patient, like someone browsing the tomato aisle. It is the insurance firm who is the third-party payor negotiating over a whole package of services with the hospital. Thus, private contracts come into play and it looks more like the tomato wholesaler and the grocery store than the grocery shopper walking through the tomato aisle. "Standard charges" become a bit more imaginary when each insurer has its own contract. It is something to consider whether the contracts in the health care part of the economy should be treated differently.