Dysfunctional Department Store Demonstrate Health Care Hoodwinks
Recently, a storewide sale sign lured me into a local department store. I meandered the aisles until I found a birthday gift for my toddler: a cute magnetic fishing pole toy. But to my surprise, I couldn’t find the item’s price anywhere. Not on the box, not on the shelf. In fact, I soon realized, I couldn’t find the price of anything anywhere posted in the entire store. Instead, the placards that should display prices encouraged shoppers to download an app to uncover the (unnecessary) mystery.
Although somewhat bothered, I was also intrigued by the company’s new tactic. So, I downloaded the app. Cell phone service was terrible, and it took a long time. Finally, I opened the app and scanned the toy’s barcode. The app crashed. Now entirely irritated, I walked over to the cash register where the singular employee on the floor serviced a long line of customers who, like me, merely wanted to learn the cost of items. Rather than waste my time in a stagnant line and dysfunctional store, I returned the toy to the shelf and ordered it on Amazon. Where, by the way, I finally learned the toy’s approximate value: $20.
The experience cements oft-repeated discussions on the flaws of a brick-and-mortar model in the age of technology. But as I ruminated over the ordeal, I recognized certain parallels to the healthcare industry.
Like that department store, the health care industry conceals its actual costs. As health care expert Sally Pipes wrote last month, eight in 10 hospitals are openly disregarding an established federal rule that requires hospitals to post their prices. If hospitals decided to abide by the rule, it would foster competition and drive down prices.
Rather than take responsibility for the prices charged, some hospitals pass the buck to insurance companies. Hospitals say they cannot reasonably estimate how much services cost when they do not know how much an insurance company will pay out. But many insurance companies can provide only rough estimates of what a hospital will ultimately charge. Some insurance companies do not bother to share the data at all. Just like the app that crashed in the department store, hospitals relying on a third party to display prices is ineffective and time-wasting.
Without knowing the price of health care, some individuals avoid receiving services entirely. I behaved similarly in the department store – rather than purchase the toy at a mystery price, I decided to forgo the transaction altogether. A 2018 study found that due to cost, 44% of Americans refused to go to the doctor when sick or injured in the year 2017. Although the study has not yet been repeated, with the pandemic and inflation, it is likely that those numbers are now even higher.
But unlike those who refrain from necessary care, I could reasonably estimate the toy’s potential cost within $10 – $20. In healthcare, costs vary considerably and unpredictably. For example, the same urology surgery could cost anywhere from $3,500 to $40,000. Imagine if the cashier rang the $20 toy up for $250! Luckily, I could return the item – but those who purchase health care services obviously do not have that same option.
Ultimately, my purchase of the little toy did not matter. But in health care, sometimes the stakes are quite literally life and death. Many are burdened with medical debt and absurd surprise bills. Americans, already stretched thin in the current inflationary crisis, need a realistic way to plan for hospital bills. Hospitals must comply with the federal rule and shed a light on the actual cost of health care.
McKenzie Richards is a policy associate at the Pacific Research Institute