The more information people have, the more power they have. This is as true in the consumer world as it is in the political world. It is the driving idea behind my legislation, LD 1305, “An Act To Encourage Health Insurance Consumers To Comparison Shop for Health Care Procedures and Treatment,” which is before the full Senate and House for consideration.
During the committee process, the original legislation was amended, so now we have a Republican version of the measure and a Democratic version of the measure. The Republican version, the minority report of the committee, maintains a shared savings incentive for consumers, while Democrats merely emphasize transparency. However, just adding transparency isn’t enough. Some 98 percent of insurers already have some form of a cost-viewing tool. People just don’t use them because they don’t have an incentive to do so.
By providing an incentive to patients to consider the cost of health care and to go with a more affordable option, the Republican plan gives consumers a reason to be involved with the process.
The incentive provided by LD 1305 requires an insurer to pay an enrollee a shared savings incentive payment of at least 40 percent of the difference between the average amount for that comparable health care service and the amount paid.
The example I like to use to illustrate how this would function is lab work I have had done. After my annual physical last year, I received a bill showing the basic lab work was over $700. Had this law been in place, I could have made a few calls or looked online to see what the average cost of that blood work was at different locations near my home. If the average were $500 in my county and I chose a location that cost $200, the total cost of the labs would have been $320; $200 paid to the provider and $120 paid to me for taking the initiative to shop. At a total cost of $320, I would have saved, my insurer would have saved, and we would have rewarded a provider in the community for providing a fair price for the service.
There are incredible price variations in health care costs, which many consumers are not aware of. Many people simply do not think about shopping around when considering a medical procedure. You have a doctor or hospital you trust, you have recommendations and/or requirements from the insurance company and that’s what you go with. And if the cost to you is going to be the same, why would you do research? It’s your insurance company that takes the hit.
However, that “hit” gets passed down to all of us through premiums and high deductibles. With LD 1305, consumers are able to share in the benefit of selecting a lower cost option for medical treatment.
It also is important to note that lower cost doesn’t mean lower quality. A facility that specializes in one procedure will perform more of them and be able to do so at a lower cost. The patient also will benefit from more direct attention to the procedure or treatment, as well.
Under the Republican plan, patients are also no longer limited by network requirements. If you want to go to a provider for a lower cost, you can do so even if they are out of network. The only difference is the shared savings incentive does not apply, but the provider is still treated like an in-network provider for insurance purposes. Choice is important, and choice that creates competition can help save consumers money while encouraging quality care.
The Republican-backed plan for LD 1305 benefits consumers across the board. It encourages transparency, as well as encouraging consumers to take advantage of available information.
In an unusual event for the Legislature, this bill was actually acknowledged to be a cost-saver for the state, with it being noted by the nonpartisan fiscal office that “any savings would accrue to insurers, participants and eventually the State through lower premiums.”
With LD 1305’s minority report, we can empower consumers to help lower the cost of health care and encourage a higher quality of health care.
Sen. Rod Whittemore, R-Skowhegan, is serving his third term in the Maine Senate. He is Senate chair of the Insurance and Financial Services Committee.