It started out normally: I was filling a 90-day prescription at Hannaford, and my insurance co-pay was $20. But wait! said the woman behind the counter. Was I a Hannaford Healthy Saver?
A what? I asked.
A Hannaford Healthy Saver. If I signed up for this program, my co-pay would drop to $9.99.
How much does the program cost? I asked.
Seven bucks. All I had to do was fill out a form — name, address, birth date, phone number, all stuff Hannaford already had on file — and Hannaford would basically give me $10. I'd make three bucks this time (plus get a coupon book that could help me save another $100), and — since the up-front fee was an annual one — I'd save even more down the road.
The next time my wife or I needed a prescription, it was almost a sure thing that Hannaford would give me more money. Nearly 500 drugs for humans (and even some for pets) are covered in this strange new program, under which 30-day prescriptions for covered drugs cost only $4. Many generic antibiotics are — get this — free. Wal-Mart offers a similar program; so do other supermarkets and pharmacy chains around the country.
But these companies are doing more than saving us money in the short term. They are teaching us how to fix our healthcare system — how to sell at rock-bottom prices and still make a profit.
Competition can be not just on service or product, but price as well. Most supermarkets offer similar — even the same — products and services. Medical professionals do, too, but they don't compete on price — try to think of the last time you saw a medical ad, even for liposuction or corrective eye surgery, that told you how much the procedure would cost.
If doctors posted their prices, competition would drive down costs — and doctors who charged more than average would have to justify their higher price by claiming a better technique, an advanced degree, or more experience. Would quality of care suffer in the name of economy? Only if the government, which regulates the quality of the groceries we buy at competitive prices, dropped its standards for medical care. Consumer protection is necessary at any price point.
It's time to apply this market common sense to the entire healthcare system. Right now, there's no way for a layperson to determine the actual cost of a prescription. The companies involved — manufacturers, insurers, distributors, suppliers, pharmacies — treat their costs as trade secrets.
The closest anyone comes to disclosure is found in the lists of "usual and customary" (U&C) costs. But no drug price is really usual or customary — partly because no two companies agree except by coincidence, but mainly because almost nobody ever actually pays it. Nobody with insurance does, because their insurance plans have negotiated a reduction. Nobody who signs up for $7-a-year discount programs does either, because that's the point of the discount.
And, in fact, the "U&C" charge is not anything close to an actual cost — the prescription I got for $10 had a U&C cost of $175!
That's the killer — and, for people who struggle to afford healthcare, it's a literal killer — the purported cost is not the actual price of providing a service (or its value to others), but rather a negotiating tool to fool others into handing over more money.
