Price transparency might work even better than anyone knew. The Journal of the American Medical Association recently published a study on Castlight Health, which provides information on health care prices and quality to users. The study had divided more than 500,000 individuals across different states and insurers into two groups: those who used Castlight (study group) and those who didn’t (control group). In situations where the study group had to pay co-pays or deductibles, members spent less on health care when they knew the prices than when they didn’t. That’s a pretty obvious and straightforward finding, in line with just about every study we’ve seen so far on price transparency. But the researchers uncovered something even more interesting, via the Real Health Reform blog (h/t Ben Domenech):
Importantly, the search for value seems to continue even when the financial incentive is taken away. The authors write—“We also demonstrated that payments for claims, even without cost sharing, were lower for those who searched than for those who did not. This result may be in part due to inertia because clinician choices when employees must pay a deductible might persist even after they have reached the deductible and have little or no cost sharing.”In other words, economizing behaviors continue even after the cost sharing is ended.
Fixing price opacity is an incredibly low-hanging fruit and each new study confirms its positive effects could be wide and deep. Yet the majority of U.S. states are failing to pursue it. A few states, including, perhaps surprisingly, Massachusetts, have taken very good first steps. But overall the nation isn’t, and that seems like a policy failure of the highest magnitude.