While an increasing number of consumers look for healthcare price information online, most people cannot find accurate and reliable data. Lack of pricing information can lead to bad decision making, poor medical outcomes, and unnecessary expenses. Keep reading to learn more about how healthcare cost transparency could improve Americans’ healthcare.
Online Health Pricing Is Hard-to-Find and Unreliable
In a December 2017 JAMA Internal Medicine research letter, a group of researchers examined online pricing data for four non-emergency healthcare services in eight cities. Through 64 Google and Bing searches, they identified 1,726 relevant websites, 380 of which were pure advertising. Of the 1,346 remaining websites, only 21.9% provided actual price transparency. Over 52% failed to provide either pricing, detailed medical information, or relevant content. Simply put, consumers rarely find informative and accurate healthcare pricing information when they search online.
A series of barriers make healthcare price transparency difficult. The first of which is that the majority of American consumers have limited healthcare literacy. Studies show that less than 15% of Americans understand basic health insurance concepts such as co-insurance, copayment, maximum out-of-pocket costs, and deductibles. Many Americans also cannot calculate their out-of-pocket medical expenses on their own.
Additionally, most of the healthcare industry is, at best, ambivalent about price transparency. Insurers have negotiated complicated payment and write-off systems that they would rather not share with their competitors and consumers. And some physicians argue that price transparency would disrupt their payment systems and impose an undue burden on their offices.
Other barriers to price transparency include:
- Price nondisclosure and gag clauses that some healthcare providers and insurers include in their contracts
- A complex healthcare price system where different insurers and plans have negotiated different rates and systems
- The prevalence of subscription-based healthcare websites that are inaccessible to most consumers
- Vague pricing information that does not differentiate between total costs and a consumer’s out-of-pocket costs
- Overly broad price information — for example, the JAMA researchers found brain MRI cost estimates ranging from $230 to $1,950
There is significant room for improvement. While JAMA researchers encouraged states to legally mandate pricing transparency, many states have faced tough opposition from healthcare lobbyists when they propose transparency laws. For this reason, legislation alone will not foster healthcare price transparency. Instead, medical providers, health alliances, and insurance companies have to embrace the concept and empower their members and patients.
Transparency Helps Consumers Make Better Healthcare Choices
Over the past decade, health insurance premiums have increased by 69%, and an increasing number of Americans are selecting high-deductible plans. When consumers do not understand their healthcare options they might:
- Avoid necessary medical treatment due to unfounded concerns about its expense
- Choose less cost-effective medical care due to ignorance about each option’s efficacy and price
- Select the wrong healthcare plan and incur avoidable expenses (such as deductibles, co-pays, and co-insurance)
Consumers simply need to understand the costs associated with their healthcare. If you’re living with a limited budget, you might have to make the difficult decision between accessing medical care or purchasing household necessities — and the wrong decision could have catastrophic results. Unfortunately, without pricing data, these families don’t have the tools to assess their options.
Price Transparency Might Reduce Healthcare Costs
Evidence suggests that price transparency reduces our healthcare costs. In 2015, the California Public Employees Retirement System (CalPERS) implemented reference pricing, a process where consumers know the median price of routine medical care. If a CalPERS member selects care that exceeds its reference price, the member must pay a higher amount out-of-pocket. In response to these market pressures, medical providers reduced their prices — and CalPERS and its members saved millions of dollars.
References:
Boynton, A., Robinson, J. (2015, July 7). Appropriate use of reference pricing can increase value. Health Affairs. Retrieved from https://www.healthaffairs.org/do/10.1377/hblog20150707.049155/full/
Hermann, R., Kratka, A., & Wong, C. (2017, December 4). Finding health care prices online — How difficult is It to be an informed healthcare consumer? JAMA Internal Medicine. Retrieved from https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2663755?resultclick=1&redirect=true
How price transparency can control the cost of health care (2016, March). Robert Wood Johnson Foundation. Retrieved from https://www.rwjf.org/en/library/research/2016/03/how-price-transparency-controls-health-care-cost.html