Physician Compensation Supply of Medical Services

Sunlight is the best disinfectant

“On the biggest shopping weekend of the year, you’ll know the price of the big-screen TV and the Wii you’re about to buy – but you’ll likely be in the dark about the cost of any health care you need.”

Two Wisconsin state senators are trying to change this.  The Milwaukee Journal Sentinel (“…Health cost disclosure“) reports that “Sen. Jim Sullivan (D-Wauwatosa) and Rep. Steve Wieckert (R-Appleton) this week introduced a bill requiring health care providers and insurance companies to make available information about the cost of procedures or services to patients who ask for it.”

Here is one type of government intervention I support: the government is helping to reduce asymmetric information in the medical care market without fixing prices.  The bill would compel providers to state the cost of the 50 most common medical procedures.  These costs would be divided into 3 groups: the usual rate for the service (whatever that means); the rate paid by government programs; and the average rate for health plans.

Milwaukee pediatrician Carl Eisenberg, does note that the cost of a procedure can vary from patient to patient.  Nevertheless, the provider could charge a fee in which for some patients they lost money, but for some “easy” patients they made above average profits. 

There are other problems with the pricing structure.

Larry Rambo, chief executive officer for Humana’s Great Lakes region, said cost information might best come from an insurance company because it can encompass the “episode of care,” meaning all the costs that go into treatment.

“If you’re going in for knee surgery, you’re going to get a bill from the hospital, you’re going to get a bill from the surgeon, you’re going to get a bill from the anesthesiologist and you’re going to get a bill from the radiologist,” Rambo said.

Nevertheless, I am always in favor of more information.  As a supreme court jurist once wrote: “sunlight is the best disinfectant.”