Need medical treatment this year and want to nail down your out-of-pocket costs before you walk into the doctor’s office? There’s a new tool for that, at least for insured patients.
Michael Flippo, Dreamstime
As of Jan. 1, health insurers and employers that offer health plans must provide online calculators for patients to get detailed estimates of what they will owe for a range of services and drugs.
As of Jan. 1, health insurers and employers that offer health plans must provide online calculators for patients to get detailed estimates of what they will owe — taking into account deductibles and copayments — for a range of services and drugs.
It’s the latest effort in an ongoing movement to make prices and upfront cost comparisons possible in a business known for its opaqueness.
Insurers must make the cost information available for 500 nonemergency services considered “shoppable,” meaning patients generally have time to consider their options. The federal requirement stems from the Transparency in Coverage rule finalized in 2020.
Patients first log on to the cost estimator on a website offered through their insurer or, for some, their employer. Next, they can search for the care they need by billing code, which many patients may not have; or by a general description, like “repair of knee joint,” or “MRI of abdomen.” They also can enter a hospital’s or physician’s name or the dosage amount of a drug for which they are seeking price information.
Not all drugs or services will be available in the first year of the tools’ rollout, but the required 500-item list covers a wide swath of medical services, from acne surgery to X-rays.
Once the information is entered, the calculators are supposed to produce real-time estimates of a patient’s out-of-pocket cost.
Starting in 2024, the requirement on insurers expands to include all drugs and services.
These estimator-tool requirements come on top of other price information disclosures that became effective during the past two years, which require hospitals and insurers to publicly post their prices, including those negotiated between them, along with the cost for cash-paying or uninsured patients.
Still, some hospitals have not fully complied with this 2021 disclosure directive and the insurer data released in July is so voluminous that even researchers are finding it cumbersome to download and analyze.
The price estimator tools may help fill that gap.
The new estimates are personalized, computing how much of an annual deductible patients still owe and the out-of-pocket limit that applies to their coverage. The amount the insurer would pay if the service were out of network also must be shown. Patients can request to have the information delivered on paper, if they prefer that to online.
Insurers or employers who fail to provide the tool can face penalty fines of at least $100 a day for each person affected, a significant incentive to comply — if enforced.
And there are caveats: Consumers using the tools must be enrolled in the respective health plan, and there’s no guarantee the final cost will be exactly as shown.
That’s because “unforeseen factors during the course of treatment, which may involve additional services or providers, can result in higher actual cost sharing liability,” federal regulators wrote in outlining the rules.
Insurers will not be held liable for incorrect estimates.
Because the cost estimates may well vary from the final price, either because the procedure was more complex than initially expected, or was handled by a different provider at the last minute, one risk is that “I might get a bill for $4,000 and I’m going to be upset because you told me $3,000,” said Gerard Anderson, a professor of health policy and management and of international health at the Johns Hopkins University Bloomberg School of Public Health.
Many insurers offered versions of cost-estimator tools before, but small percentages of enrollees actually used them, studies have shown.
Federal regulators defended the requirement for estimator tools, writing that even though many insurers had provided them, the new rule sets specific parameters that may be more detailed than earlier versions.
In outlining the final rule, the Centers for Medicare & Medicaid Services pointed out that some previous calculators “on the market only offer wide-range estimates or average estimates of pricing that use historical claims data” and did not always include information about how much the patient had accumulated toward an annual deductible or out-of-pocket limit.
The agency says such price disclosure will help people comparison-shop and may ultimately help slow rising medical costs.
But that isn’t a given.
“CMS has a lot of people who believe this will make a significant impact, but they also have a long time frame,” said David Brueggeman, director of commercial health at the consulting firm Guidehouse.
In the short term, results may be harder to see.
“Most patients are not moving en masse to use these tools,” said Dr. Ateev Mehrotra, a professor of health care policy at Harvard Medical School.
There are many reasons, he said, including little financial incentive if they face the same dollar copayment whether they go to a very expensive facility or a less expensive one. A better way to get patients to switch to lower-cost providers, he said, is to create pricing tiers, rewarding patients who seek the most cost-effective providers with lower copayments.
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Monkey Business Images
Photo Credit: Monkey Business Images / Shutterstock
The challenges facing the healthcare sector in the U.S. are numerous. The U.S. lags behind other developed nations on many key metrics of health, including life expectancy, chronic disease burden, and avoidable deaths. The population has been growing older on average with the aging of the Baby Boomers, creating increased demand for health services. Longtime public health challenges like obesity, substance abuse, and mental illness have wide-ranging impacts on Americans’ overall health and well-being. And in the last few years, the COVID-19 pandemic has placed unusually heavy strain on healthcare providers and hospitals.
With these many interlocking and compounding challenges, the U.S. spends heavily to support the healthcare system. According to federal data, national health expenditures in the U.S. total $4.1 trillion per year, making up nearly 20% of the nation’s GDP. The bulk of this spending comes from the federal government, which contributes 36.3% of expenditures, and U.S. households, which account for 26.1%.
Often underappreciated in discussions of the U.S. health system is the role of state and local governments. States and localities frequently fund public hospitals, health inspections, mental health and substance abuse programs, water and air quality programs, and payments to private hospitals for public health services. State and local governments funded 14.3% of total national health expenditures in 2020.
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This spending is one of the most significant budgetary responsibilities of state and local governments. Health and hospitals represent the third largest spending category for state and local governments, behind only public welfare and elementary and secondary education. Collectively, governments spend $345 billion on health and hospitals each year, accounting for nearly 10% of all state and local spending.
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State and local spending on health and hospitals on a per-capita basis has also grown over time. In the year 2000, state and local governments spent $678 per capita on health and hospitals in inflation-adjusted dollars. By 2020, that figure had risen to $1,040—an increase of more than 50%.
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However, this trend has not played out the same in all locations. In fact, 13 states have seen a decline in health and hospital spending per capita over the last decade, led by Arizona, where spending has declined by more than 50%. In contrast, other states have seen rapid growth in health spending. Vermont’s inflation-adjusted state and local spending per capita more than doubled between 2010 and 2020, from $355 to $730, and Utah’s 96.2% rate of growth was not far behind.
Just as trends in health spending have varied by geography, total spending also looks different from state to state. Nationwide, states and localities spend around 9.9% of their budgets on health and hospitals, at a total of $1,047 per capita. But a number of states and localities spend well above these figures, including Wyoming, where the per-capita spending is nearly triple the national average, and South Carolina, where health and hospital spending represents nearly 20% of state and local expenditures.
The data used in this analysis is from the U.S. Census Bureau. To determine the states that spend the most on health and hospitals, researchers at HowtoHome.com calculated health and hospital spending as a share of total spending. In the event of a tie, the state with the greater total health and hospital spending per capita was ranked higher.
Here are the states that spend the most on health and hospitals.
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Shutterstock
Photo Credit: Agnieszka Gaul / Shutterstock
- Health & hospital spending as a share of total: 10.7%
- Total health & hospital spending per capita: $999
- Total health & hospital spending: $6,747,518,000
- Total direct expenditures: $62,806,487,000
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Shutterstock
Photo Credit: Sean Pavone / Shutterstock
- Health & hospital spending as a share of total: 10.7%
- Total health & hospital spending per capita: $1,061
- Total health & hospital spending: $9,112,433,000
- Total direct expenditures: $85,243,956,000
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Shutterstock
Photo Credit: Photosbykaity / Shutterstock
- Health & hospital spending as a share of total: 11.2%
- Total health & hospital spending per capita: $1,078
- Total health & hospital spending: $10,748,283,000
- Total direct expenditures: $95,700,844,000
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Shutterstock
Photo Credit: Roschetzky Photography / Shutterstock
- Health & hospital spending as a share of total: 11.3%
- Total health & hospital spending per capita: $1,013
- Total health & hospital spending: $29,753,376,000
- Total direct expenditures: $263,279,685,000
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Shutterstock
Photo Credit: Andriy Blokhin / Shutterstock
- Health & hospital spending as a share of total: 12.2%
- Total health & hospital spending per capita: $1,677
- Total health & hospital spending: $66,029,051,000
- Total direct expenditures: $541,102,413,000
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Shutterstock
Photo Credit: photo.ua / Shutterstock
- Health & hospital spending as a share of total: 12.8%
- Total health & hospital spending per capita: $1,289
- Total health & hospital spending: $4,190,560,000
- Total direct expenditures: $32,812,538,000
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Shutterstock
Photo Credit: f11photo / Shutterstock
- Health & hospital spending as a share of total: 14.0%
- Total health & hospital spending per capita: $1,557
- Total health & hospital spending: $4,925,808,000
- Total direct expenditures: $35,283,924,000
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Shutterstock
Photo Credit: mahaloshine / Shutterstock
- Health & hospital spending as a share of total: 14.0%
- Total health & hospital spending per capita: $1,623
- Total health & hospital spending: $12,487,009,000
- Total direct expenditures: $89,455,201,000
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Shutterstock
Photo Credit: picsbyst / Shutterstock
- Health & hospital spending as a share of total: 14.2%
- Total health & hospital spending per capita: $1,208
- Total health & hospital spending: $7,431,898,000
- Total direct expenditures: $52,380,770,000
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Henryk Sadura
Photo Credit: Henryk Sadura / Shutterstock
- Health & hospital spending as a share of total: 15.5%
- Total health & hospital spending per capita: $1,561
- Total health & hospital spending: $4,548,137,000
- Total direct expenditures: $29,333,928,000
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Shutterstock
Photo Credit: Sean Pavone / Shutterstock
- Health & hospital spending as a share of total: 17.1%
- Total health & hospital spending per capita: $1,597
- Total health & hospital spending: $4,736,972,000
- Total direct expenditures: $27,688,049,000
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Shutterstock
Photo Credit: Rob Hainer / Shutterstock
- Health & hospital spending as a share of total: 18.7%
- Total health & hospital spending per capita: $1,687
- Total health & hospital spending: $8,302,347,000
- Total direct expenditures: $44,406,818,000
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Shutterstock
Photo Credit: Jon Bilous / Shutterstock
- Health & hospital spending as a share of total: 18.8%
- Total health & hospital spending per capita: $1,665
- Total health & hospital spending: $17,650,732,000
- Total direct expenditures: $93,667,411,000
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Shutterstock
Photo Credit: Jacob Boomsma / Shutterstock
- Health & hospital spending as a share of total: 18.9%
- Total health & hospital spending per capita: $2,936
- Total health & hospital spending: $1,709,488,000
- Total direct expenditures: $9,029,287,000
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Shutterstock
Photo Credit: f11photo / Shutterstock
- Health & hospital spending as a share of total: 19.3%
- Total health & hospital spending per capita: $1,787
- Total health & hospital spending: $9,326,575,000
- Total direct expenditures: $48,273,596,000
