One great liberal health care hope is that we can fix our cost problem by setting prices. At Vox, Ezra Klein argues that we should regulate health care prices because it would help make costs transparent:
In Health Affairs, Jonathan Skinner, Elliot Fisher and James Weinstein note data from Castlight Health showing that the price tag on one particular cholesterol test can range from $15 to $343 — and that’s just within the city of Dallas, Texas.And before anyone yells “Free Market!”, these prices are rarely, if ever, published, and often they’re not even the actual price people pay. If markets are going to work well, both buyers and sellers need a lot of information about how much things cost and how good they are. In health care, buyers are denied basically all of that information, and they’re occasionally unconscious when the transaction is being handled. This is not what a functioning market looks like.
We couldn’t agree more. The natural conclusion to draw from this diagnosis is that we should move, as quickly as we prudently can, to a functioning health care market. That would include price transparency reforms, of course, but would have other features as well. But Klein doesn’t draw that conclusion. Instead he argues, following the Health Affairs piece, that we need to cap health care prices for procedures at 125 percent of what Medicare pays for them. He argues that this policy would do one of two things. Either it would force price transparency on the industry or it would show that health care can never be a functioning market— and prices should be entirely set, not just capped, by the government.This is pretty tortured logic, one that relies upon the assumption that the only thing that can push health care towards transparency is yet more regulation. But no other industry requires price caps to set standard, transparent prices. Klein’s relying on the idea that “health care is special” and thus cannot be expected ever to perform like other markets. But in fact we already see some emerging solutions to the price opacity problem—services like Castlight, state level reforms, and victories against coalitions invested in opacity—and we know price transparency works. Setting price controls is a simple solution to a complex problem, and thus it naturally appeals to a certain kind of technocratic mindset. But it is not the only or the best way forward, and we should take our cues from the solutions that are already bubbling up across the country.