Knowledge is power — the power to think, to act, to buy, or even to not do any of the above. Our nation’s health insurers and health care providers need to figure out how to put power back into the hands of consumers. Consumers today have too many constraints when it comes to accessing decision-critical information about the cost of health care. That’s a hard pill to swallow when there’s so much at stake.

A recent post on The Health Care Blog featured a fascinating yet not unsurprising finding: The cost for appendectomies can vary by more than $100,000 between health plans and hospitals.

Dr. Renee Hsia of UCSF was asked what appendectomies cost by a friend who had to pony up over $50,000 in co-pays for one. Dr. Hsia’s research, which looked at pricing variability across the state of California and was published in the Archives of Internal Medicine,  found that an appendectomy could run from $1,529 to $182,955 — varying as much as $7,504 to $171,696 within one hospital.

The question of where to begin is starting to be answered by sites like FAIR Health’s Consumer Cost Lookup. It uses continually updated claims data from insurers and third-party administrators for 126 million people to benchmark costs. Visitors to the site can find typical rates for certain services in their area as well as what Medicare pays.

Fourteen other states have or are setting up searchable databases to help compare health care prices and quality.

The savings that can be realized are impactful not only for consumers but for health insurers themselves. Because half its members had no idea when they were being referred to out-of-network providers, Aetna launched a service to let members know if their outpatient surgery could be done by an in-network provider. In many cases, the surgery could be done less expensively, in-network reducing out-of-pocket costs for Aetna members, not to mention for Aetna.

More and more insurers are trying to help people locate services and compare costs, like UnitedHealthcare’s postcard campaign, which lists costs for common lab services at in-network and out-of-network facilities in members’ local areas and its online tool for estimating the costs of over 100 common treatments.So what’s central to all of these stories? Information.

In the California appendectomy story the information was too hard to get: too many sources, too many different plans. And, technically Aetna didn’t offer consumers (and network doctors) anything they didn’t already have access to. The information was just too hard to piece together and act on.

What these stories show us is that health care consumers today need access to information, plus tools and services to make sense of it all. Like Aetna, United Healthcare and other insurers who have developed cost-comparison tools for consumers, the insurance side of health care has been making cost information more available to aid consumer decision-making. We look to healthcare providers and hospitals to start doing the same.

Bringing transparency to the costs of services and products can supercharge consumer decision-making, forcing healthcare providers and hospitals to be more upfront with price information and to work on getting a better handle on costs for “incidents of care.”

Extend Health Medicare Exchange Interface

Extend Health Medicare Exchange Interface

The Extend Health exchange platform is a great example of transparency in an insurance shopping site. It delivers information on thousands of private Medicare plans to our customers — and it does it in an easy-to-understand way. Our system supports benefit and cost transparencyby allowing customers to compare plans side-by-side and estimate their prescription drug costs for the year. These tools, along with the opportunity to speak with a benefit adviser if they wish to, help ensure that our customers find the plan or plans that meet their health needs and the needs of their budget.

Massachusetts and Utah already offer the ability to buy health insurance online through their state exchanges. The upcoming Supreme Court decision on the Patient Protection and Affordable Care Act will determine if citizens in every state will have the same opportunity. If all or part of the ACA is struck down, health insurance exchanges — a forum whose effectiveness is based on transparency in costs, benefits, services and products (such as drugs) — could be in jeopardy.

Related articles

For regular commentary on developments and trends in health care, insurance, and health IT, follow @brycewatch and @ExtendHealth on Twitter and check out Extend Health online.

My latest Fast Company blog post here. A new Kaiser study shows that health care premiums are skyrocketing, but as new provisions of health care reform come into effect, companies can do a lot to make their employees healthier for less money.

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Visit Extend Health — the nation’s largest private Medicare exchange.

Yesterday I spoke with Emily Chasen, writer for the Wall Street Journal CFO journal, and today she published this piece about the future of private exchanges as a mechanism for providing health care benefits to active employees. You must be a subscriber to see the whole story, but here’s a snip:

“…a corporate exchange could be a middle ground between keeping a group plan and leaving employees to  use the state exchanges. Regulations that would affect corporate exchanges are still being written, so most companies will probably want to wait for the new laws to take effect in 2014 before deciding whether to use them….According to Bryce Williams, CEO of health-care exchange operator Extend Health, such corporate exchanges could offer companies an alternative to buying group plans from a health insurer.”

Visit Extend Health — the nation’s largest private Medicare exchange.

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Earlier this year, I wrote an article for InsuranceNewsNet offering my opinion that the individual mandate provision of the Patient Protection and Affordable Care Act (PPACA) is not essential to achieving the law’s goal of ensuring that tens of millions more Americans have health care coverage.  The individual mandate provision requires all citizens to obtain health insurance by 2014 or pay a fine.

In the past 30 days, court rulings on both sides of the question of whether the individual mandate provision is constitutional makes it even more likely that the U.S. Supreme Court will review the matter sooner rather than later.

The unconstitutionally of the individual mandate has become the central argument of opponents in legal challenges to the entire law. They argue that if such a key provision is ruled unconstitutional, the entire law should be unconstitutional. It also remains unpopular with average Americans. In a new poll out last week from the Associated Press and National Constitution Center, 82% of respondents said “no” when asked, “Do you think the Federal Government should have the power to require all Americans to buy health insurance, and to pay a fine if they don’t?”

We’ll have to wait and see how the U.S. Supreme Court rules to know the fate of the provision. But my own opinion hasn’t changed. Based on our experience at Extend Health, if a health insurer offers seniors a private Medicare plan that meets their needs at a price they can afford, they will buy. This is because certain conditions for Medicare-eligible seniors exist that do not exist for all Americans. Most important, Medicare is guaranteed issue and requires standard plan designs.

Guaranteed issue means seniors cannot be denied coverage because of their health status. Standard plan design makes it possible to compare and contrast different plans from different carriers more easily. And these are exactly the conditions all uninsured Americans will experience under PPACA starting in 2014.

While I still believe that these conditions are necessary for large numbers of uninsured Americans to buy health plans without a mandate, today I would also argue they are not sufficient. In addition, the key stakeholders driving the extension of health care coverage to more Americans will need effective outreach programs to ensure that all Americans know their options, understand their eligibility for the federal subsidies that will be offered, and know where and how to purchase health plans.

A large group of these stakeholders – health insurers, health care providers, associations and health care nonprofits – took a major step in the right direction last week when they launched a nonprofit coalition with the mission of ensuring that “all Americans are enrolled in and retain health coverage.” Enroll America  will do this by working to ensure that enrollment processes are simple and streamlined and that people know where they can go to find the right information at the right time.

It’s too early to tell whether Enroll America will be successful. But the importance of its mission cannot be underestimated. While the ACA lays the foundation for insuring tens of millions more Americans with guaranteed issue and standard plan design, finishing the job will require that every American understand what’s coming, and what they can do and when.

Visit Extend Health — the nation’s largest private Medicare exchange.

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