Flu Shots On Sale
The expansion of stand-alone, urgent care centers sheds some light on a lively exchange at this blog on free-market pricing of care versus Medicare’s pricing system. Because they are not captives of the third party payment system, urgent care centers compete on price.
Pictured below is a direct mail advertisement from an urgent care center offering flu shots for $19.99, a price that is $5.00 to $10.00 below the prevailing price in the grocery and drug stores in its area.
While a $5.00 saving is negligible to policy researchers used to dealing in billions of dollars, the Centers for Disease Control (CDC) estimates that 123.3 million Americans were immunized against seasonal flu during the 2009-2010 flu season. If price competition resulted in a $5.00 saving on every immunization, health care spending would have fallen by $616 million.
Medicare reimbursement for the cost of a seasonal influenza vaccination in the Doctors Express area seems to have been roughly $32.038 per person. This is $7 to $2 above the prevailing cash price in the area. But a little more than one-third of this amount was for the vaccine. A 57-page CDC document (That’s no misprint; there are 57 pages in all!) informs providers about Medicare coverage for adult immunizations. For the 2009-2010 flu season, there is a reimbursement rate of $20.67 for vaccine administration. Another CDC website reports that Medicare reimbursement for the cost of the vaccine was $11.368.
An estimated 26.4 million Medicare clients received flu shots in the 2009-10 flu season. Allowing $2.00 per person for administration (one-tenth of what it now spends), Medicare could have sent every one of those enrollees a $20 gift card for a flu shot at Doctors Express and saved taxpayers about a quarter of a billion dollars.
A billion here, a billion there, and pretty soon freeing patients and providers from third party payment systems would add up to real money.
Markets work.
Medicare should pay the market price (not some artificial phony price) for urgent care centers, walk-in clinics and other cost-effective outlets. It would save taxpayers a bundle.
It is also interesting how as the flu season wears on, the price for a flu shot seems to fall as retailers fear getting stuck with unused flu vaccines.
Bruce is right, markets work. If they are allowed to do so.
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