How to Bring the Price of Health Care Into the Open, Essay Example

The name of the article which was reviewed in the wall street journal is titled: Beck, Melinda. “How to bring the price of health care service into the open.” The Wall Street Journal, 23 February 2014. The article discusses transparency in the prices of health care services which are provided by health care providers. The article debates that the individuals who are receiving the care and the individuals who are delegating the care should be able to know how much the cost of the health care service is in order to make an informed decision. In knowing the prices of the health care service which they are receiving, the health care personnel are able to enable the patient to determine if the health care provider which they are using is correct of if the would like to apply the services of another health care providers. Free competition is an essential element of our economic system and how can someone make a choice if they are unaware as to the exchange value of labor which a service costs (Browning 189; Weber 1).

The topic which is relevant to this article is the characteristic of price transparency. Price theory concerns itself with regards to the assigning and the conveying of value. The activity of assigning and conveying value to items incorporates the capacity of interchanging goods and services between various economic actors. A primary and confusing question which must be asked is why is there a differential between the price of water and the price of a diamonds. The debates which had been raised by economist Adam Smith in the late eighteenth century had been that the value of diamonds is extremely elevated due to their scarcity. The amount of work which is required to retrieve a diamond is the determining factor in the exchange value of the diamond.  Adam Smith had been a firm believer in free market capitalism (Browning 189; Weber 1).

In the health care field the problem is that there is no scarcity. Notwithstanding the amount of accumulated labor which must be traded in order to acquire the privilege of being attended by a health care professional may vary in different circumstances and according to the payer. The cost of health care is conventionally paid by the insurance companies.  The health care providers usually ask the insurance companies for a premium price due to the attributes of negotiation which occurs between the health care providers and the insurance companies which are paying. There is a substantial amount of negotiating which takes place between the health care provider and the insurance companies which are paying for the services received by the health care patient.

Notwithstanding, the patient who is the receiver of the health care services is usually unaware of the costs of the health care services which have been received. What would Adam Smith say about this type of situation?  The primary question is how can the health care provider assign a value to a service whose value is unknown or fluctuating in distinct conditions? The new government and state regulations regarding health care service transparency have the capacity of providing information with regards to the treatment in order to obtain the potential expenditure. There are a number of online implements which can be applied in order to determine costs.

How can the value of the comprehensive health care services which have been rendered to the health care patient without their being cognizant of the component costs of the health care service? The article discusses the health care service of receiving magnetic resonance imaging in a session. The list price is $2844.00. The price which is delegated to United Health Care Services is almost two thousand dollars ($1990). The price reported for the medical resonance imaging session if the patient pays cash is $695. The amount which the health care provider is willing to settle with Blue Cross is $617. The amount which the healthcare provider requests from AETNA is $520; the amount which is billed to CIGNA is $341 – $362. The quantity which would be billed to Medicare for the patients who are Medicare recipients is $335.00. Considering all of the variations in health care prices for the same service, it does seem as if there is a substantial discrepancy in the value which is assigned to the health care service which has been provided (Beck 1).

Conclusion

It is difficult to perceive that a provider of health care and the recipients of health care are completely unaware of the potential costs of the health care services which are provided to the client. The best that can be achieved in this situation is to reveal the actual costs of the health care services provided to the patient. In this manner, the patient and the health care provider may be aware of the actual value of the interchange of accumulated labor which is delivered in exchange for health care services

Work Cited

Beth, Melinda.” How to bring the price of health care into the open.” Wall Street Journal, 23 February 2014. Web 20 April 2014. http://online.wsj.com/news/articles/SB10001424052702303650204579375242842086688

Browning, Edgar K. & Zupan, Mark .A. Microeconomics theory and applications 11^th e edition. 2011. Print.

Weber, Thomas A. Price theory in economics. Ecole Polytechnique Fédérale de Lausanne, n.d. Web.  20 April 2014.<http:infosciences.epfl.ch/recorde/175205/files/MTEI-WP-2012-002-Weber.pdf>