CA person trying to buy cereal at the supermarket. Buyers can easily find out how many grams of sugar and calories are in a serving and how much a box costs before they get in line at the checkout line. However, in the US healthcare market, this is often not the case. Prices are high, volatile, and difficult to observe. I'm an economics professor. The courses I teach explain the importance of complete and accurate information about price and quality in a well-functioning market. When buyers and sellers have access to accurate and timely information, the invisible hand can become a powerful force that drives prices down to cost levels and makes markets more efficient.
My own research shows that the same procedures, such as an MRI or a medical examination, vary widely by region. But don't just take my word for it. Award-winning hip-hop artist Fat Joe recently said: …It's the only place in the world you go to and you have to guess how much you're paying. ”
You don't need a Nobel Prize (or a Grammy) to understand that without price transparency in health care, consumers can suffer. Despite the progress made over the past few years, that's exactly where we could end up. Recently adopted hospital transparency rules (requiring hospitals to publicly disclose the prices they negotiate with insurance companies) and coverage transparency (requiring group health plans to publicly disclose the prices of insured products and services) ) are at risk of being bogged down by regulation. stagnation. Hospital regulations suffer from penalties that are too small to deter widespread violations by facilities. Sabrina Corlett of Georgetown University called reporting transparency “confused.” This problem is caused by large file sizes and a lack of standardization, which prevents end users of these tools from accessing their potential benefits.
However, there is still time to treat this disease.
Many believe that price transparency depends on individuals choosing the lowest-cost procedure. Yes, this element of consumer choice is important. But price transparency is also about giving employers and unions the ability to create optimal health care plans by accessing and auditing claims data. And that is where our current policies fall short. It is difficult for researchers and companies to analyze the transparency of coverage data. And businesses especially need access to this data. After all, our employers are fiduciaries and should have full access to medical bill payment receipts and their digital confirmations. We need to rethink medical benefits from being in the realm of human resources to being in the realm of the chief financial officer. If an employer (the person who ultimately negotiates health care costs when we obtain insurance through work) cannot find the lowest cost for a given level of quality, employees will You get stuck with bills. Although individuals appreciate having choice in their health care, uncertainty often increases spending because employers are unable to track optimal cost-effectiveness.
Let's take an example. The Osceola School District in Florida realized that it was under-represented by its insurance company for benefits and management, took corrective action, fought for its employees, and collected a $582,000 settlement. This kind of success story is only possible when employers themselves, and the executives who are ultimately responsible for healthcare costs, take control of their data. Stopping inappropriate payments and seeking lower-cost options when prices can fluctuate by a factor of 10 or more will require employers and unions to implement strong price transparency rules in the interest of employees. This is an important method that can be used.
I recently had the opportunity to observe a Congressional hearing on price transparency. One of the things I observed was how much agreement exists between both Democrats and Republicans on the importance of transparency. The Health Care Price Transparency Act, sponsored by Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Bernie Sanders (D-Vt.) and HELP Committee Member Sen. Mike Braun (R-Ind.), We have come a long way in codifying much. Pro-market, pro-consumer ideas. The Senate bill would eliminate loopholes for noncompliance in previous rules by requiring disclosure of all rates and cash prices negotiated between plans and providers, rather than estimates, and increasing the maximum annual penalty to $10 million. It will block the It would standardize machine-readable files. And it would ensure that employers have access to insurance claims data.
Occam's razor principle states that if there is a simple solution to a problem, it is very likely to be the correct solution. The simple solution is to put transparent prices in the hands of consumers and their employers. Pushing forward with the Senate bill seems the logical next step.
Benjamin Chartock is an assistant professor of economics at Bentley University in Waltham, Massachusetts.
