Price Transparency in Health Care

(cc photo by donielle)

BA writes in to say I should write more about transparent pricing in medical services:

I think you should do some posts on the lack of transparent pricing of medical services. My girlfriend just injured her knee. Her primary care physician referred her to a sports medicine doctor who said, it doesn’t appear to be major, but I think you should get an MRI. When she makes an appointment for an MRI she learns that it may cost at least $900 out of pocket because her health insurance has a $2,500 deductible. I tried to look online to see if there were any websites that provided comparative pricing for MRI services and could find nothing. She called her insurance company and they said they were unable to provide her with pricing information for the various providers in the area. When you call the providers themselves and ask, they say Ask your insurance company. I think one way we could improve health care in the US is to require providers to post the prices of their services so that you can compare. There are at least 15 providers in the immediate area (Chicago) so it is not for a lack of competition that prices are out of whack, it a result of opaque pricing that leaves the consumer of medical services powerless.

I’m not really sure how much good increased price transparency would do, since in many situations there really isn’t much provider competition, but it certainly seems like it would be a step in the right direction. According to the Heritage Foundation the need to increase price transparency is one of the main reasons it would be a good idea to repeal the Affordable Care Act. Unfortunately, as often happens when you hear conservatives making constructive proposals to improve health care policy in the United States it turns out that this is already in the bill and in fact constitutes a reason conservatives should shy away from root-and-branch repeal. You might say to yourself “as a free marketer, I don’t want to mandate price transparency.” What you should say to yourself is “between Medicare, Medicaid, public sector workers, and tax subsidies the vast majority of health care spending is publicly financed and the client ought to demand some accountability.”