Healthcare Triage: Reference Pricing, CALPERS, and Reduced Health Care Costs

from The Incidental Economist at http://bit.ly/2gtaG7G on November 29, 2016 at 08:24AM

Healthcare Triage: Reference Pricing, CALPERS, and Reduced Health Care Costs

At a time when health care spending seems only to go up, an initiative in California has slashed the prices of many common procedures.

The California Public Employees’ Retirement System (Calpers) started paying hospitals differently for 450,000 of its members beginning in 2011. It set a maximum contribution it would make toward what a hospital was paid for knee and hip replacement surgery, colonoscopiescataract removal surgery, and several other elective procedures.

Under this new approach, called reference pricing, patients who wished to get a procedure at a higher-priced hospital paid the difference themselves.

And reference pricing is the topic of this week’s Healthcare Triage.

This episode was adapted from a column Austin wrote for the Upshot. Links to references and further reading can be found there.

@aaronecarroll