Yes, Price Transparency Will Lower the Cost of Health Care
- BY FGA
It is difficult to find a truly bipartisan issue these days, but nearly all Americans can agree: People have a right to know the price of something before they buy it.
Consumers expect to know the costs of groceries, gas, and even college tuition before we open our wallets. In fact, we would be appalled if someone asked us to buy these things without knowing the prices ahead of time. So, why don’t we expect the same from our medical bills?
Finally, we do. Ninety percent of all Americans want more transparency when it comes to health care prices. It is an issue that unites both Democrats and Republicans in an increasingly partisan world.
Right now, medical costs are hidden from consumers. The inflated prices that result from price secrecy have driven thousands of families into financial ruin, taking resources away from people trying to pay family bills, put food on the table, and run small businesses.
Pandemics and recessions are not the time for health care providers to make it harder for Americans to make ends meet. Those recovering from COVID-19 are fighting for their lives—they shouldn’t have to fight a second battle with medical debt too.
We deserve a more transparent health care billing system, one that lists prices in advance and allows customers to shop around for non-emergency medical tests and procedures. The Health Care PRICE Transparency Act would require medical providers to disclose the cost of a service or procedure to patients ahead of time, and require hospitals and insurers to publish their discounted cash prices and secret negotiated rates.
With this knowledge, Americans could shop around and make informed decisions that best meet their health care needs and budget. Hospitals and other providers would finally have to explain why prices vary dramatically from one state to another, from cash to insurance transactions, and even within the same hospital location—and lower their prices accordingly.
The result would be a game changer for every family, especially for those with disabilities and chronic conditions who have to schedule non-emergency medical visits on a regular basis.
However, a recent paper by the Mercatus Center argues that price transparency would not necessarily result in lower costs for patients. It claims that knowing prices only helps consumers when they have enough ‘skin in the game’ to make shopping around worth their effort.
Of course, anyone who has ever had to choose between paying a surprise medical bill and paying the mortgage can tell you—Americans have plenty of ‘skin in the game’ when it comes to the cost of health care, and shopping around is definitely worth the effort.
But don’t take our word for it. There is much evidence that more price transparency has already lowered health care prices across several states. In Kentucky, price transparency for public employees has saved more than $13 million. In New Hampshire, price transparency resulted in patients paying 36 percent less for imaging. There is also evidence that some price transparency is better than no price transparency. In California, even those outside of the transparency program saw a 75 percent price reduction.
Hardworking American families will no longer tolerate secret prices in our health care system. Like all other goods and services in our economy, medical providers should name their prices out in the sunlight, where people can see them.
When consumers have access to prices ahead of time, they can make the best decisions with their providers of the best care pathway forward informed by price, location, and quality information all at the same time. Their lives—and their livelihoods—depend on it.
