How Much Does Your Insurance Pay Your Doctor; Do You Care?

There are a few cost comparisons we are familiar with when comparing health insurance options, while choosing an insurance option from your employer’s benefits package, for example. Generally you'll see the different plan options laid out, with column showing what's covered and at what percentage, out-of-pocket costs such as your portion of the premium costs, deductibles and co-pays.

As healthcare costs grow, there's been a commensurate growth in interest about increasing patient/ consumer cost awareness. In some cases by 'cost sharing'- shifting more costs to the consumer- and in other cases providing actual prices for medical services. The great moral hazard of health finance generally arises from the fact that neither the provider nor the patient (if insured) bears the brunt of costs, and in many cases neither of those parties is even aware of how much a service will cost.

Now imagine if two other columns where added to that table you were using to compare health plans. One of the new columns has quality information, either some measure of how in-plan providers rate compared to all doctors in the state, or some indication of what type of quality data might be available to help you choose a primary care provider, specialist or if you are lucky enough to have a choice, a hospital for non-emergency procedures. Those types of measures have long been hoped for, but are not the main focus of this discussion.

The next column provides information I've not heard widely discussed. This would be some ballpark measure of the average or median amount that the plan in question pays providers relative to other public and private payees and the cost of providing services. Why would you want to know this? A couple of possibilities come to mind:

--Are plans charging more in premiums, etc.. paying providers better?

--Maybe I feel that I'll get better care and more time with providers who are getting reimbursed more for the care they provide me.

One arena where this might come into play: State such as Vermont that are looking to provide some form of single -payer plan to cover all their citizens will be tempted to essentially expand Medicaid to cover everyone. The trouble is that Medicaid pays providers far less than it costs to provide care, rendering the program somewhat unsustainable. Private payers and uninsured persons not covered by Medicaid essentially subsidize the state program.

So what might happen if consumers able to opt into Medicaid were empowered with knowledge about how much their insurance was paying providers relative to the costs of providing services? If choosing between a free state plan and more costly private one, would patients avoid an expanded Medicaid-like insurer who reimburses at low rates, for fear it would impact the care their doctor provides? Do consumers covered by such a plan have a right to know how much their doctor is being paid to provide care for them?

All other things being equal, would knowledge of how much your doctor will be paid on your behalf influence your health insurance choice? Why?

And while we are on the path towards cost transparency, let's add a third new column that tells us what percentage of premiums are spent on administrative overhead. Perhaps I'd like to reward a more efficient company with my business.

What about you?

Photo credit: The author