Will price transparency drive up health care costs?

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health reform. He welcomes questions and suggestions and tip sheets at joseph@healthjournalism.org.

transparency-webcastWill increased price transparency in health care drive up costs? That’s what a health plan association executive suggested last week and it’s a question I’ll ask panelists during our webcast on price transparency on Thursday at 1 pm Eastern time: The cost of health care: Is transparency possible?

Once lower-paid physicians see what higher-paid doctors are charging, lower-cost doctors will demand higher rates from health insurers, David Pittman reported in MedPage Today. Quoting Dan Durham, executive vice president for policy and regulatory affairs for American’s Health Insurance Plans, Pittman wrote that by demanding higher prices, low-cost providers would drive up premiums, making coverage less affordable.

Durham’s remarks came at the Robert Wood Johnson Foundation’s National Summit on Health Care Price, Cost and Quality Transparency last week in Washington, D.C.

The counterargument to Durham’s point is that price transparency can foster competition, and thus may keep costs low. Modern Healthcare Editor Merrill Goozner made this argument over the weekend. “Competition over healthcare prices and quality is coming. Transparency and the radical redesign of health insurance benefits will be its handmaiden,” he wrote.

General Electric, a self-insured employer, distributes extensive data on health care costs and patient outcomes to its half million employees, family members and retirees, Goozner added. Using this information, the employees, family members, and retirees can compare prices and the quality of care physicians and hospitals deliver. Recently, GE moved its 500,000 plan members into a high-deductible health plan, meaning they will need more information about health care costs than they have had in the past.

Other employers are enrolling workers in high-deductible health plans and individuals are finding these plans attractive as well, according to an article posted Sunday night by Leslie Scism and Timothy W. Martin in The Wall Street Journal. But while the premiums for these plans are low, the overall costs may be high. Many consumers with modest incomes who are signing up for coverage under the Affordable Care Act are encountering deductibles so steep they may be unable to afford the portion of medical expenses that insurance doesn’t cover, Scism and Martin wrote.

During our one-hour webinar, the panel members will explore these and other compelling issues related to price transparency. The panel members are Suzanne Delbanco, Ph.D., executive director of the Catalyst for Payment Reform in San Francisco, and Katherine Hempstead, Ph.D., a senior program officer at the Robert Wood Johnson Foundation in Princeton, N.J.

2 thoughts on “Will price transparency drive up health care costs?

  1. Jeff Bailey

    That’s a nutty premise. Price transparency tends to drive prices down, not up, of course, as we’ve seen in industries (airlines being a great example) that moved from opaque pricing to public display of prices on the Internet. Transparency puts the buyer and seller on a more equal footing. A few docs thinking they can charge more because one down the street does would be small beans compared to lower prices wrought by transparency in prescription drug sales and medical testing. Our site, which is independent and does not operate for a profit, lists these prices for two major metro areas, Chicago and DFW, and prices literally vary as much as 10-to-1 on commonly prescribed drugs and on medical tests in many cases. That’s because patients (and often docs) have no idea that prices vary so much so they don’t seek out competing prices. LesliesList.org is the site. Its founder, Dr. Leslie Ramirez, is an expert on price transparency in healthcare and a primary care physician in Chicago. Someone arguing against price transparency either has a vested interest in opaque prices or is very confused about how markets and consumers behave. Thanks

  2. Pingback: Primary care offices provide price transparency | Simplee

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