COLUMBIA — The senator uses this analogy: Imagine driving along the road and seeing two filling stations. You have to buy gas, but neither station has a sign telling how much the gas costs.
“How would you know which one to go to?” Sen. Rob Schaaf, R-St. Joseph, asked rhetorically.
The analogy represents the blind choices people make in health care, Schaaf said, because insurers do not have to disclose how much a medical service will cost with various providers.
Schaaf, who is also a family physician, is sponsoring Senate Bill 122, which would require insurance companies to provide information online to customers about the cost of services through various medical providers.
Different hospitals or medical facilities charge different rates for the same service because insurance companies and health care providers draw up unique contracts and have unique costs. Under the new law, as Schaaf envisions it, people could simply type what service they needed into a website, and the prices at various medical facilities would appear.
The bill also states that insurance companies cannot charge extra for prescription medicine if prices fall below the co-pay.
The cost transparency outlined in the bill would bring competition to the field of health care, Schaaf said. And that would help lower health care costs through means other than the federal health care bill. Schaaf opposes the mandatory nature of the bill.
In August, Missouri voters passed Proposition C, which was intended to block the federal government from requiring people to buy health care insurance, or fining them for not buying it. Voters approved the proposition by 71 percent. The proposition, however, cannot be enforced unless the U.S. Supreme Court decides the health care bill is unconstitutional.
Schaaf seeks to lower costs through policy change.
“If we’re trying to start getting the cost of health care down,” Schaff said, “we have to get the health care providers at all levels to feel the pinch of competition.” That, he said, is the best way to drive down costs.
The Department of Insurance provides regulation for more than 500,000 people and companies doing business in Missouri.
How would the bill benefit people?
People would pay less for health care if they could shop for the cheapest places, Schaaf said.
“We have people in our state who don’t know which provider to go to because they don’t know how much money its going to be out of pocket,” Schaaf said. Insurance companies "won’t tell you the day before but they will tell you the day after. By then, it’s too late.”
Transparency about the quality of services would improve with transparency about cost, Schaaf said.
“Those who have a higher cost will want to justify their higher cost by touting quality,” he said.
Finally, if the bill enabled employers to cut costs, it could bring jobs. With lower health care premiums, even the state could save money, Schaaf said.
“That bill would probably put more people back to work than any other bill that is before us,” he said.
What are the possible disadvantages?
“There are no harms to giving people information about the services they are choosing,” Schaaf said.
Supporters and opponents of the bill agreed with that statement, but some disagree on the preferred method of transparency.
“Conceptually, it makes some sense,” said Brent Butler, government affairs director for the Missouri Insurance Coalition, “but it’s going to cost money.”
The fiscal note in the bill stated that officials from the Missouri Consolidated Health Care Plan, which manages health care for state employees, estimated costs would run over $1 million in the first year, and in following years, the cost would level at $500,000.
The figure was estimated by the branch of United Healthcare that provides many state workers' health care, said Chris Dunn, Schaaf's spokesman. And the figure could be too high, he said.
Butler said the bill wouldn't save everyone money. People with a set copay would pay the same price to any provider, he said.
Finally, Butler said, the bill could duplicate statutes in the federal health care bill, adding unnecessary work and costs.
Schaaf said worries about rising costs were "crocodile tears."
“It’s inherent in the structure of insurance companies that they don’t want the market to change because that will drive down the cost,” he said.
Costs could rise or fall
A Congressional Research Service report from 2008 asked, “Does Price Transparency Improve Market Efficiency (in the Health Sector)?” The results showed prices usually drop with market transparency, but in some cases allowing more information among bargainers can raise prices.
“Most of this evidence ... suggests that price transparency leads to lower and more uniform prices ... If this evidence could be applied to the health market, it would suggest that reforms that increase transparency would reduce prices,” the study reported.
The authors looked at various markets and also said, “price transparency can either increase or decrease prices.”
What do health care providers say?
“We have supported the issue of cost transparency,” said Dave Dillon, spokesman for the Missouri Hospital Association. “Movement toward a system that’s more transparent will be helpful.”
Dillon said he could not say he supported the bill until he had seen the final version.
“Talking about legislation is talking about a moving target," he said.
Several years ago, the Missouri Hospital Association created a web database that provided typical costs for common medical procedures. The database was not heavily used, Dillon said. It had about 1,000 hits in the first year and a few hundred hits in following years. The association discontinued the service.
People should have access to cost information about health care, whether it comes from health care providers or insurers, Dillon said.
This bill could be useful to those with high insurance deductibles, he said.
Jacob Luecke, spokesperson for Boone Hospital Center, said officials from the hospital did not have an opinion on the pending legislation but they support cost transparency.
Boone Hospital Center has an online form to allow people to request procedure cost estimates. The hospital's goal is to answer within two days, Luecke said.
"Our overall goal is to have patients as fully informed as possible about all aspects of their care," he said.
What's next for the bill?
“We perfected it in the Senate,” Schaaf said. “It has a great chance for success.”
The bill has been approved vocally in a second hearing. The fiscal note is currently under review, and it has to pass a third hearing before it will go to the House. The bill was scheduled to go to the Senate floor for discussion on Wednesday.
Schaaf is sponsoring Senate Bills 92, 98, 111, 136, 153, 214 and 215, which collectively address health care policy issues.