Anthem Announcement Highlights Hospital’s Role in Health Care Costs

David Williams
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Posted: Oct 11, 2017 12:01 AM
Anthem Announcement Highlights Hospital’s Role in Health Care Costs

Whether suffering from a broken arm, a nagging cough or a fever that won’t break, Americans across the country look to hospitals to cure their ailments. Hospitals are supposed to deliver trust, transparency, and accountability from health care providers, but hospitals are failing on all three counts. In the wake of the Affordable Care Act (ACA), and yet another failure to repeal and replace it, continued uncertainty is allowing hospitals to engage in egregious behavior to raise profits at the expense of taxpayers. Unfortunately, their decisions are harming patients and driving up healthcare costs for all Americans.

Mega health insurer Anthem recently announced that it will cease paying for hospital outpatient imaging procedures such as MRIs and CT scans in 13 states by March 2018. This means that patients who typically visit hospitals for these scans will be forced to go to independent imaging centers that are less costly for the insurance company.

Anthem’s decision will limit patient choice and make healthcare less convenient—many patients will have to travel further for care—but hospitals are as much to blame as the insurer. Hospitals are not normally held accountable, so they overcharge for imaging scans to boost their profits. In fact, imaging scans reportedly bring in more than half of their profits. Hospital administrators in states where Anthem operates are understandably nervous that they will lose a main source of revenue.

Transparency and accountability are necessary for markets to function efficiently, but in health care, patients rarely know what to expect in terms of cost or service. For example, an MRI could cost a couple of hundred dollars at a physician’s office, but thousands in a hospital. Even worse, patients have no way of knowing what they’ll pay before receiving a bill.

That lack of transparency distorts the market and hurts patients, who don’t have enough information on pricing or value to make informed decisions on which provider to choose. Hospitals aren’t transparent in pricing because if they were, they wouldn’t be able to charge such exorbitant rates, but overcharging drives up health care costs for all taxpayers.

Hospital greed—charging much higher rates for the same service as other providers—has caused Anthem to limit patient choice, but it’s a lose-lose situation. If Anthem’s plan goes through, patients will be forced to look elsewhere for care and hospitals will lose money. Americans in rural areas, where there may only be one medical facility for miles, will be hurt the most.

The ACA has failed to uphold many of the key principles it was founded on. Health insurance premiums continue to rise, often by double digits, even though Americans are getting stuck with narrower coverage networks. Hospitals overcharge for services and surprise patients with unexpected bills but aren’t held accountable. Some “non-profit” hospitals even boosted revenue under the ACA while decreasing charity care. Worse, too many Americans still don’t have access to affordable, quality healthcare.

There are many drivers of health care costs, but hospitals haven’t received the scrutiny they deserve or their fair share of the blame. Consumers should know that conscious choices hospitals make to boost revenues are limiting choice and competition for patients and driving up healthcare costs. Free market reforms that encourage competition increase choice and require transparency and accountability in health care are necessary to decrease costs and improve health outcomes.

Recent efforts have proven that reform is difficult, but President Trump and Congress can still make meaningful changes to improve the American health care system. Taking a closer look at hospitals and embracing policies that promote more honesty and transparency in pricing would be a good start. If nothing is done, patients will be stuck with high prices, few choices and minimal competition while hospitals and insurers line their pockets.