Frakt: Don’t expect much from price transparency

Price Transparency Is Nice. Just Don’t Expect It to Cut Health Costs.

By Austin Frakt
The New York Times, December 19, 2016

Lack of price transparency in health care has been cited as one of the reasons we spend too much on it. It’s easy to overpay. Health care prices vary tremendously. And there is no established relationship with quality.

Over half of the states have passed laws that either establish websites with health care prices or require plans, doctors and hospitals to disclose them to patients.

But improved transparency isn’t working as well as hoped. Health care pricing apps and websites don’t always help patients spend less.

That’s the conclusion from a study published this year in The Journal of the American Medical Association. It investigated the effect of the Truven Treatment Cost Calculator, a website available to more than 21 million workers and their family members.

The study found that price transparency did not reduce outpatient spending, even among patients with higher deductibles or who faced higher health care costs because of illness.

Study after study has showed the same thing.

If there’s one thing we’ve learned time and again, it’s that there’s no single best way for reducing health care spending. Price transparency may be part of the answer, but it clearly isn’t the entire answer.



By Don McCanne, M.D.

One of the reasons given for using high deductibles in health plans is that they supposedly reduce spending by encouraging patients to shop for lower health care prices. Austin Frakt shows us that the impact of price transparency on spending has been relatively trivial.

What little benefit it has is not worth t ahe cost in the form of causing patients to forgo beneficial health care and in exposing patients to financial hardship because of out-of-pocket spending.

Frakt repeats what many others have said, “there’s no single best way for reducing health care spending.” But that assumes that we keep our current flawed financing infrastructure in place and merely tweak it with a few innovations - primarily from the private insurance industry.

In contrast, a single payer system would reduce administrative waste by a few hundred billion dollars and would set the health cost trajectory on a lower path (“bending the curve”). That is the single best way of controlling health care spending. We should do it.