Debate Desk
Does Price Transparency in Health Care Not Matter to Patients?
Patients cannot shop for care when no one will tell them the price; hospitals have resisted the federal rule, and posted prices expose wide differences.
The claim
Some argue that patients in an emergency cannot shop, that price lists are too complex to use, and that insurance, not posted prices, is what determines what people pay. Transparency, they say, is a distraction.
The answer in three points
- Much of care is not an emergency. Imaging, knee replacements, lab tests and many surgeries can be planned, and patients with a high deductible or a health savings account have good reason to compare. When prices are hidden, competition cannot work.
- The spread in prices is enormous. Hospitals in the same city have charged very different amounts for the same procedure, with no relation to quality. Making those figures public lets patients, employers and insurers choose and pressures high-priced providers to explain or lower them.
- Hospitals have resisted. After federal rules took effect in 2021 requiring them to post prices, many were slow to comply, and the industry sued to stop the requirement. A sector that fights the posting of prices tells you what it expects the prices will show.
The principle is the one we apply to everything else we buy. We would not order a car without knowing the price, and we would not sign a contract for repairs with no estimate. Health care is more complicated, and a patient who is told the price in advance can compare, ask questions and decide, which is the beginning of a market that serves the buyer.
The numbers
- The Centers for Medicare and Medicaid Services' hospital price transparency rule took effect on January 1, 2021, according to the agency.
- The American Hospital Association challenged the rule in court, and the D.C. Circuit upheld it in December 2020, according to the court record.
- The Transparency in Coverage rule requires health plans to post negotiated rates, with the requirement phased in from 2022, according to the Department of Labor.
What they will say next
"Prices are confusing." They can be, and tools and apps are getting better with data. Competition among tools is what the data make possible, and a clear, standardized format helps.
"Insurance sets what I pay." Insurers still negotiate prices, and when they are public, patients and employers can see what they are getting. Out-of-pocket costs follow the underlying price.
"Patients choose by quality, not by price." Price and quality data together serve this. Posting price does not forbid anyone from selecting a higher-quality hospital.
"Hospitals face costs the public does not see." They can explain them, and the explanation is part of the market.
A market cannot function if one side does not know the price.
"Transparency lets hospitals collude on prices." The risk exists in concentrated markets and is a reason to watch mergers and to guard against price signaling. It is not a reason to keep patients in the dark, since hidden prices have produced some of the highest bills of all.