It could soon be easier for Alaskans to know how much they’re going to pay out of pocket for healthcare. The Legislature passed a bill requiring doctors and hospitals to provide cost estimates before patients receive services.
Deciding whether to undergo a medical procedure can be difficult. Anchorage Democratic Rep. Ivy Spohnholz said not knowing how much you’re going to pay makes it tougher.
“When you go to buy a car, you find out,” she said. “There’s a list on the car that says exactly what the car’s going to cost. But there’s no other market where you really have no idea what a service is going to cost you before you consume it, except for in health care.”
She sponsored the bill, which would require doctors, hospitals and other providers to list prices for common services. The bill also would require providers to give their best estimate of what a patient would pay out of pocket.
The bill received support from employers that provide health insurance and the insurance brokers that help them purchase it. The measure is modeled on similar rules enacted in Anchorage last year.
Anchorage city manager Bill Falsey said many have welcomed the new price transparency.
“We certainly heard some concerns from some health care providers, but we were able to work through the vast majority of those,” he said. “And we received a lot of enthusiastic response from a lot of insurance groups, some consumer groups — folks who are worried about the cost of health care in Alaska.”
Doctors argue that listing the prices before any potential discounts can be misleading. For example, consumers may actually pay less out of pocket for services at one practice with a higher listed price than they would at another at another with a lower listed price. That’s because out-of-pocket costs for patients with insurance depend on the rates their insurers negotiate with providers.
“This … is one of those cases where a little bit of information is almost worse than no information at all,” said Dr. Joseph Roth of Juneau. He told the Senate Judiciary Committee that the bill may lead providers with lower listed prices to raise their prices.
“Posting prices by physicians actually leads to an increase in overall health care costs, as physicians are then able to see what other providers are actually charging,” he said.
Hospitals also expressed concern with posting the undiscounted prices. Jeannie Monk represents the industry as the vice president for the Alaska State Hospital & Nursing Home Association.
“There isn’t necessarily a correlation between high cost and the highest quality, but sometimes in patients’ mind there is that,” she said. “So sometimes if patients see something costs more, they think that it’s better.”
This can be a problem. For example, public workers don’t pay much directly. That’s because their insurer covers most costs.
“Most of Alaska’s public plans still have low deductibles for their employees,” Monk said. “However, private-sector plans are increasingly adopting high deductibles and that’s where price transparency becomes more important for those employees that are more engaged.”
Spohnholz said the patients who benefit most from the bill include those without insurance, as well as those with high deductible insurance.
“Those plans are designed to incentivize wise consumption of services, and you have to know what they cost if you’re going to be a wise consumer,” she said.
Doctors and hospital leaders alike said insurers are in a better position to tell patients what they’ll have to pay. But insurers said providers know more about how complicated a treatment might be, which will affect the cost.
Spohnholz said both insurers and hospitals support patients knowing what procedures will cost. But she said neither wants to be the bearer of bad news regarding out-of-pocket costs.
“There’s definitely a hot-potato element in the health care price transparency and in the cost element of health care, with insurers and providers throwing the hot potato back and forth – and both pointing fingers at the other one, saying the other one is the problem,” she said.
Spohnholz and other lawmakers said the bill would be a good first step. They said future legislation could focus on making the potential value of health care services to patients more transparent.
The legislation was added as an amendment to a separate measure — Senate Bill 105 — on the last day of the legislative session, to allow it to pass before the session’s end. The House passed the amendment, 31 to 8, with all eight no votes coming from the Republican minority caucus. The Senate agreed to the change, with all 19 senators present voting for it. Republican Sen. Bert Stedman of Sitka was absent.
The bill hasn’t been sent to Gov. Bill Walker yet.
Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.
