August 6th, 2009
06:00 AM ET

Setting mandatory prices for healthcare?

As a regular feature of CNNhealth.com, our team of expert doctors answers readers' questions. Here's a question for Dr. Gupta.

From Cindy in Covington, Georgia:

“Why doesn’t the government make mandatory prices for doctors and their services? That’s the problem. They all charge outrageous prices and vary from place to place. Will that change in the new plan?”


Well, first of all, Cindy, you're absolutely right. It’s amazing, even within Medicare you have widely varied prices across the country. One operation in one state might cost $6,000, but in another state, the same operation might cost $17,000. So it does vary even for those covered under Medicare right now.

We are hearing some of the specifics of these health care bills. Nothing has been set in stone but we're hearing that there may be caps on out-of-pocket expenses and full coverage for preventive care.

What we are not hearing are specifics about is whether there will be a set price for various procedures and tests. We asked the White House specifically about that and we were told no, there is no plan in any of the bills so far to set prices across the board, across the country.

The idea is that the government would have a public option for some Americans. This option is for people who can't afford their health care right now. And it's based on a percentage of their premiums as compared with their income. If your current insurance premium is 11 or 12 percent of your salary or higher, you might qualify to buy into this public option. And in terms of overall costs, a public plan would in some ways compete with private insurance companies and may influence how prices are set overall.

The bill being considered now specifies two interesting points in terms of costs. One is that no payment rates would be lower than the Medicare rates right now. Also they would not be able to set prices higher than the average of all plans in the so-called insurance exchange. “Exchange” is the term used to describe the system of private insurance plans and the public option that would come with reform. So there is no direct setting of prices for doctors or hospitals, but a lot of potential influence over prices in the long run.

Critics of the House health reform bill argue that the government plan will always get the better deal. It will always be able to negotiate better prices than private insurers because there will be a larger pool of people. Therefore it would be able to negotiate prices that will not be as low as Medicare but will be low enough that private companies won't be able to compete.  The administration will say this assumption that Americans will flood the public plan is not necessarily true because not everyone will qualify.

One thing I can tell you is that the specifics of the bill are likely to change in the days and weeks to come. I'll continue to break down the details and give you both sides of the argument as Washington works to reform our health system.

Filed under: Expert Q&A • Health Care Costs

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Get a behind-the-scenes look at the latest stories from CNN Chief Medical Correspondent, Dr. Sanjay Gupta, Senior Medical Correspondent Elizabeth Cohen and the CNN Medical Unit producers. They'll share news and views on health and medical trends - info that will help you take better care of yourself and the people you love.