Don’t mandate transparent health care costs

Shifting something from voluntary to mandatory can turn positive to negative. Consider transparency in health care pricing.

Americans lament the opaqueness of hospital and doctor bills. Ask how much a procedure will cost, and the usual answer is a shrug. Ask afterward, and the provider advises the patient to wait until the bills arrive. When they do, they might as well be in hieroglyphics. There are “costs” minus “discounts” with “insurance” deducted, followed by a cryptic “patient may owe” figure that may or may not be what the patient owes.

This strips patients of the usual benefits of competitive markets — including pressure for providers to push prices down. This situation isn’t intrinsic to health care. Our public policies encourage vagueness.

In contrast, Surgery Center of Oklahoma offers hundreds of procedures and lists the price of each on its website. Patients across the country can compare SCO’s clear prices with guesstimates from elsewhere. That saves pa- tients money and puts pressure on prices, even in other states.

Why not require every facility to be as transparent as SCO?

First, it’s beneficial to let the SCOs of the world use transparency to beat the competition. There are reasons why the car market has dealers whose obscure prices are subject to haggling and others, like CarMax, where the price you see is the price you get. Some customers are better off haggling or meticulously researching costs, while others benefit more from certainty.

Second, as antitrust law recognizes, public pricing can sometimes lead to collusion — another way for providers to resist downward pressure.

Third, the transparency mandate itself can serve to exclude competitors. A large, politically connected hospital chain might lobby the government to mandate transparency in a way that upstarts find excessively expensive or impossible to meet.

Some good things are best left to the willing.