Sarah Kliff has a post about a new start-up that’s devoted to promoting consumer awareness about health care packages (via). Castlight Health will basically serve as an aggregator for news and prices of health care packages, much in the same way that Yelp! is now a go-to for people who want to learn more about businesses. Here’s how, ideally, it’ll be useful:
The idea of comparison shopping is a relatively simple one; it’s something we do all the time. But in health care, there’s traditionally been little place for it. Health insurance plans have traditionally assessed a flat co-pay for a specific health care service, like a colonoscopy or annual physical. The prices, from the consumers perspective, are all identical.
A flat co-pay, however, can mask huge variation in what doctors charge insurance companies. In California, for example, doctors bill anywhere between $1,529 and $186,955 for an appendectomy.
In recent years, health insurance has evolved to give subscribers more reason to care about what doctors bill. With premiums skyrocketing, employers have increasingly turned to Health Savings Accounts. Under those arrangements, employees are given a “defined contribution” — a set amount their employer will pay for health care. That’s different from a traditional, “defined benefit” plan, where employers cover a specific range of benefits, regardless of cost.
HSAs are generally paired with a high-deductible health plan, meant to provide stop-gap coverage for individuals who end up requiring especially high amounts of health care.
In a defined contribution plan, employees have a huge reason to find the doctor who charges $1,529 for an appendectomy — namely, that bill will be drawn directly from their Health Savings Account.
That’s also where Castlight comes in.
No word in the piece about whether Castlight will have product reviews, a la Yelp!, and I’m sure there are a gazillion ways this can go terribly wrong. Still, intriguing idea.