Do con­sumers re­ally ben­e­fit from price trans­parency?

Modern Healthcare - - COMMENT -

Re­gard­ing the re­cent ar­ti­cle “Con­sumers de­mand price trans­parency, but at what cost?” (, June 23), are they re­ally de­mand­ing trans­parency?

I’m as­ton­ished that so many in healthcare con­tinue to fo­cus on pub­li­ciz­ing ac­cu­rate prices, in hope that no­tional con­sumers will use them to shop by price and qual­ity—and thereby con­tain costs safely. This is not a crit­i­cism of the story, but a wider ob­ser­va­tion.

Why the as­ton­ish­ment? First, it’s very hard to get ac­cu­rate prices for the care pa­tients ac­tu­ally re­ceive.

Sec­ond, there’s lit­tle ev­i­dence that many peo­ple will use them to de­cide where to get care. Third, good data on qual­ity re­main hard to ob­tain. Fourth, peo­ple who do shop for care rely on price more than qual­ity. This means a drift to­ward lower-qual­ity care­givers, es­pe­cially by lower-in­come pa­tients. Why? Em­ploy­ers hike out-of-pocket pay­ments to press pa­tients to shop for care. But a given out-of-pocket bur­den, such as a $3,000 yearly max­i­mum, weighs more heav­ily on lower-in­come pa­tients, dis­pro­por­tion­ately push­ing them to­ward low­erqual­ity care­givers.

Fifth, un­for­tu­nately, higher out-of-pocket costs lead to lim­ited care across the board, re­gard­less of need. If con­sumers did shop by price and by qual­ity, that would only in­flu­ence where they got care—which spe­cial­ist they saw or whose MRI or phar­macy they used. It would not help them de­cide whether they needed that care. Re­ly­ing on higher out-of-pocket costs to pres­sure Amer­i­cans into shop­ping by price/qual­ity amounts to a tax on be­ing ill.

All of this orig­i­nates in a mis­taken belief that high U.S. healthcare costs stem from ex­ces­sive care-seek­ing, which re­sults from ex­ces­sive in­sur­ance cov­er­age. U.S. health spend­ing per per­son is in­deed dou­ble the rich-democ­racy av­er­age, but our rates of hos­pi­tal dis­charges and physi­cian vis­its are 20% be­low av­er­age.

If Amer­i­can pa­tients don’t shop by price and qual­ity, why do many em­ploy­ers, in­sur­ers and politi­cians press them to do so? One rea­son is hope this will help cre­ate a func­tion­ing free mar­ket. I fa­vor free mar­kets about as much as any­one, but I also re­call an in­junc­tion against wor­ship­ping golden calves. True free mar­kets aren’t pos­si­ble in healthcare.

Amer­i­cans pay high prices for all of this—grow­ing un­derin­sur­ance, debt, in­se­cu­rity, po­lit­i­cal anger and fric­tion be­tween pa­tients and their doc­tors and hos­pi­tals.

Alan Sager, Ph.D. Pro­fes­sor of health pol­icy and man­age­ment Bos­ton Univer­sity School of Public Health

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