Do consumers really benefit from price transparency?
Regarding the recent article “Consumers demand price transparency, but at what cost?” (ModernHealthcare.com, 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