If You Have to Ask the Price … (part 1)

One thing that I hear from time to time during the debate discussion about healthcare reform legislation goes something like this: “Healthcare is expensive because healthcare consumers are unaware of the true cost of their choices. Patients would pick less expensive care if they knew up front the actual price of the healthcare services and products they use.”*

I’ve always been a bit leery of this argument. It assumes that, if all the information is public, patients will research the costs of providers, even though most patients don’t currently look at the public data about the quality of their doctors or hospitals. Furthermore, it treats healthcare like a bulk commodity, which it isn’t. We patients usually place much more emphasis on on the quality of outcomes doctors provide, how available they are, and the personal relationships we build with them than we do on the cost of their services. Sometimes it may be possible to swap one drug for another; but even then we want the best that we can afford — the one that’s most effective with the fewest side effects — not just the one that’s least expensive. Patients shouldn’t be penalized for choosing a pricier option when the different treatments have different medical outcomes. (Of course, it would be nice if patients were informed when there’s no actual difference in efficacy between two drugs or procedures, especially when one costs a lot more than the other.)

But it occurred to me that I really don’t know the full cost of my healthcare. Maybe the proponents of the “people would pick the least expensive option if they knew better” point-of-view have a point. So I started to uncover these costs today while shopping at CVS, my local pharmacy chain. (Later I’ll post the costs submitted by my doctors to my insurance company.)

I did two things at the pharmacy. First, I bought some over-the-counter items: vitamins, Breathe Right nasal strips, glucose tablets, etc. For them, price absolutely comes into play. A pharmacist had previously confirmed that there’s no actual difference in effect between more expensive name-brand vitamins and the store-branded generic versions. So I bought the bottle of vitamins with the least expensive per-unit price. Ditto for the glucose tablets. (Fortunately the CVS brand tastes pretty good . . . all things considered.) But the generic nasal strips aren’t the same, and I like the Breathe Right versions much better. Since I can afford to pay the 30% price premium, I do.

I also refilled my three prescription medications. The pharmacy tech was nice enough to tell me what the cost would have been if I didn’t have insurance, that is, if I actually had more of my own cash at stake.

  • Humalog insulin from Eli Lilly — 2 vials = $242.99
  • Freestyle test strips from Abbott Labs — 200 count = $235.98
  • Timolol eye drops (generic version) — 15 mL bottle = $31.39

That’s $510.36 for one month of medication. I feel very fortunate that I have good insurance which includes a prescription drug benefit. The monthly cost to me in copays is rather high, about $80, because I somehow manage to hit all three tiers of the benefit ($10 generic, $25 preferred name-brand, and $45 non-preferred drug).

So how about the argument? Now that I know how much my drugs cost — now that it’s no longer hidden behind copays — will I make different choices? For the Humalog insulin, absolutely not. There are less expensive insulins out there, but they either act differently or are no less expensive. And the eye drops are generic, so we’re talking price differences in single-digit dollars . . . billed to my insurance . . . who can use its reimbursement power to negotiate a better price if it so chooses. Those test strips, though. Each costs slightly more than $1. That’s expensive, especially given that I go through 7+ per day.

When my copays on them went from $35 to $45 over the summer, I actually did look at switching to a less expensive option. But I’m very pleased with my meter’s reliability, even if it is a bit long in the tooth. Nevertheless, I check out the Bayer Contour, but the copay was the same, and the full price was comparable, too. What about the “preferred” brands for my insurance? Maybe this sounds like a cop-out, but switching meters is tricky. You have to get the meter — which can be expensive unless you go somewhere where they’re just giving them away to get you hooked — and if you don’t like it you’re stuck with a prescription.

What about using a different vendor? In the abstract, that’s a great idea. At the moment I write this, Wal-Mart is selling 50 count boxes at $39.00, or $156.00 for an equivalent amount to what I get now. (Amazon has even better prices, but this is one of the few times where I’d rather go with Wal-Mart, since they actually have pharmacies, maintain a reliable chain of custody, and would process my insurance.) And I could lower my copay to $90 every three months if I switched to having a 90-day supply mailed to me. So there are options that would lower the cost to me both directly and indirectly (through potentially lower premiums). I think I will try to save myself some money and do that when I exhaust the refills on this prescription.

But I won’t be switching to Wal-Mart as my pharmacy, even though the out-of-pocket price for the same product is one-third less. For one thing, the nearest Wal-Mart is an inconvenient two towns away, while CVS is just down the street. And I don’t like Wal-Mart’s business practices very much, so I try not to shop there. (And, yes, I know that I can afford the luxury of outrage and that many others can’t. Let’s just move along. Nothing to see here.) But most of all, there’s no good reason why I should have to switch pharmacies based on price.

Here I’m getting quite close to validating the point that I started out being leery of. I am insulated from the costs of my medication via copays, so I do possibly make more expensive medical decisions. But I don’t feel that it’s my responsibility to navigate all of the choices of vendors to find the lowest price. The insurance companies should do this, and I’m sure to a certain extent they do. (I’m 90% sure that they can afford to lower copays when you switch from 30-day to 90-day supplies because they work directly with the manufacturers and can negotiate a price.) Medicare has proven that if you say what price you’re willing to reimburse, healthcare providers will go along with that price. One of the benefits of having insurance is to have someone else doing this work for me. No, not “me” . . . “us” . . . the pool of the insured . . . a very large group represented by a company that should be trying to maximize its profits — if you believe in that sort of thing for insurers — by using its market power to drive down prices (just like Wal-Mart does).

But I disagree with the whole “if patients were more aware of the costs, they would spend fewer healthcare dollars” argument from a different angle, too. Everyone without insurance — and even a lot of people with it — are acutely aware of the cost of their healthcare. And they do spend less, but often that’s because they’re forgoing treatment or taking half-doses of medications or skipping checkups or living with chronic, treatable pain or choosing options that cost less but have poorer outcomes.

If we want to control costs, being aware of them is not enough. We should look at actually fixing why costs are high to begin with and why there’s such a large variance between the cost at different stores and for patients with different insurers.

Part 2 . . .

* — Few rarely come out and say it, but there’s usually also the following implied sentiment: “. . . And the way we will make patients aware is by having them pay for their healthcare out-of-pocket before reimbursement or via a healthcare debit card that they’ve paid into via payroll deductions or tax credits.” John McCain lost my vote last year when he laid out a position very similar to this. Seeing these prices today, makes me even happier that this isn’t really a politically viable option.

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3 Responses to If You Have to Ask the Price … (part 1)

  1. mary says:

    i use a mail-order pharmacy for two prescriptions that i use every day, and it saves me a decent amount of money. i get a three month suppy for the cost of two months, which saves me $128 total each year (which isn’t much compared to how much you spend on prescriptions, but it’s still 1/3 of what i would be paying if i went the CVS or walmart route). it can be kind of annoying to remember to call in the refills every three months, but the company leaves me friendly reminder voice mails if i forget. and, for prescriptions that must be refrigerated (one of mine does, one doesn’t) the regular, kind of slow free shipping is upgraded to two-day shipping for free (and they pack the box full of coldpacks).

  2. Leslie M-B says:

    That’s one disturbing footnote and just more evidence of how out-of-touch our wealthy senators are. Had I paid for Lucas’s birth out of pocket, it would have run me something like $32,000–and that’s the rate negotiated with the insurance company, and I never saw a doctor, only midwives and nurses. (Lucas saw a pediatrician for about 5 minutes.)

    As it was, with my grad student health insurance, I was responsible for 20 or 25% of that amount–and that $8000 or so was well over half my take-home income for the year. Mind you, I was already taking the “cheap” route by going with midwife care instead of ob/gyn.

    Ditto with Pete’s shoulder surgery earlier this year. It was about $28,000 for three hours total of pre-op, surgery, and post-op; we paid $545. $545 seems completely reasonable to me for that kind of surgery, even though it’s a burden on our budget; $28,000 out of pocket, waiting for reimbursement, does not seem quite so reasonable.

    BTW, the diabetes test strip prices are listed on a panel next to the pharmacy counter where I pick up my meds. It has always shocked me how expensive those things are.

  3. [anonymous] says:

    I really like this argument – a lot more than some of the yelling matches I keep hearing from people who are uninformed. I listened to a really interesting report about healthcare on NPR a few months ago, and there are some real issues with it. However, I know that I go to the doctor from time to time just to make sure that something isn’t a big deal, and I probably don’t need to make the trip. I might think about this differently if I didn’t have insurance, but when your heart is racing you kind of want to know why, even if it isn’t anything.

    I don’t know what the answer is, but I don’t think we’re there yet, which is why it’s frustrating that it’s going to cost so much not to fix it.

    [Ed. note: I have edited the name and URL of the poster, since it was pushing the edge of spam. I appreciate the poster's apparent thoughtfulness, though, so I'm not deleting it outright.]

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