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

If you have followed this blog for even a few weeks, you probably heard me say several times what this article says; the idea that patients can be turned into price conscious shoppers for health care is bogus. In addition, even if they could, it would affect only the least costly areas of health care spending, essentially some outpatient services. 

Even the concept of high deductibles as a tool to motivate people is questionable. Let’s say a family has a $5,000 deductible. You may assume they would be shoppers because it is in their best interest, but not necessarily so. If a family has ongoing health care expenses because of several children, one or more members with a chronic condition or similar situation, and is likely to reach that deductible or near it, then it doesn’t matter what they spend because it only means they reach their reimbursement point sooner in the year, that reimbursement could be 100% at which point they have no interest in prices at all. 

To complicate matters, exactly what price are they shopping for? Three different patients with different coverage may each be billed a different fee. If I called a imaging center and asked the price of a mammogram, what they may tell me has little relationship to the price I will be charged OR the conversation gets very complicated based on my insurance coverage. 

Whether the typical patient in need of health care is disposed to an online search for their insurers negotiated prices for a given procedure code is questionable at best. 

What’s the answer? Tight networks with deeply discounted pricing made public. Oops; tried that small network thing not something people like. How about every provider is allowed the same price for a given service and they can compete on service and quality ? Oops, sounds like big government, those free market dreamers and many providers aren’t going for that one. 

As long as we keep focusing on the insurance payers of health care instead of the providers and their patients, we have no chance of changing the cost of health care. And, by the way, neither does Obamacare. 

Dennis Scanlon, a Penn State health economist, is not surprised. “Health care choices are different than most product and services,” he said. “Most decisions are driven by physician referrals, and insured patients usually face little variation in costs across options.” Another reason people may not price-shop for health care is that they could find the process too complex.

Providing more information to consumers doesn’t always improve their decision making. In many settings, it can overwhelm a person and lead to poorer choices. It’s far easier to go on a recommendation, even if it costs more. And not every kind of health care is amenable to shopping.

According to one analysis, only about 40 percent of spending on health care is. Patients can reasonably shop only for care that is for nonemergencies and would be motivated to do so only if they stood to gain. If patients’ out-of-pocket costs are the same at both a high-cost and low-cost doctor, what’s to prompt them to select the cheaper one? Insurance is paying for the difference anyway.


  1. I do not think that dental plans are an apple to apple comparison. There are very few life and death emergencies. My dentists have always explained what they are going to charge for everything and what percentage the insurance should cover. They wait for insurance approval in some cases. I am not aware that they use any special drugs and can almost always prescribe generic drugs. My choices are often to fill a cavity, get a root canal or to pull the tooth.

    For my doctor I shop for access not cost. I have to find a doctor who will take my insurance and can give me an appointment. If I am sick I do not even know how to shop for other doctors without getting a diagnosis first. I never know which test I’ll be asked to get and I am not going to waste time shopping or weeks waiting to get another appointment with a new doctor and have to start all over and incur the same costs again.

    Long term drugs you might be able to shop over time and as you understand your conditions and treatment but if you didn’t trust your doctor’s treatment in the first place why are you still with him. Which takes me back to it is the doctor that my insurance company allows me to see.

    I am guessing that the medical coding for dental work might be only a few hundred possibilities compared to the thousands of possibilities for all other medical treatments thus making it much hard to understand.


  2. Solution? No! Americans were long ago deceived into believing that they want the best health coverage YOUR money will buy! That someone else SHOULD and WILL pay.

    However, if your “solution” is to moderate the ever increasing cost and utilization of medical services, a combination of restricted networks, transparent pricing, point of purchase cost sharing coupled with reference pricing has been shown to be successful – for dental plans!

    Perhaps it can be replicated in the medical arena – but only AFTER a change in Americans’ mindset about medical as an entitlement that should be funded by others.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s