The American Interest
Analysis by Walter Russell Mead & Staff
With Health Care Prices, What You Know Could Still Kill You

Bills

Making patients more aware of health care prices won’t stop medical spending from bankrupting the US. In the wake of Steven Brill’s now-famous piece on hospital price-gouging, people on all sides are coming to agree that increasing health care price transparency is an important policy goal. But Dr. Peter Ubel argues in The Atlantic that it won’t fix our cost problem:

Consider what happened in New Hampshire after the state began releasing price information on things like MRIs, as part of its health care price transparency efforts. In the twelve months following that bill, prices hadn’t budged at all.

Ubel offers a few reasons why price transparency perversely might even increase prices. For one thing, patients often mistake quality for cost and so assume the higher-priced treatment is the better one. But the more important problem with price transparency traces back to the basics of our insurance system. In the insurance model, a third party pays many of your health care costs. Even if insured people were told the full price of their care, why should they care about the treatment’s expense if someone else is paying the bulk of it?

US health care needs major surgery, not a routine checkup. Price transparency, like innovations in drugs and treatments, is the kind of low-hanging fruit that we should continue to harvest. But we shouldn’t expect these small measures to fix the system on their own. Nothing short of a revolution in service delivery will bring costs under control. This revolution will involve everything from using new technology to diagnose patients remotely to experimenting with new kinds of clinics. Without these big advances, all the price transparency in the world will only yield marginal benefits.

[Bills image courtesy of Shutterstock]

Published on April 10, 2013 1:00 pm
  • http://www.facebook.com/people/Bart-Hall/100001198168989 Bart Hall

    Those are European receipts. Note the comma as decimal and the period as thousands-separator.

    • http://www.the-american-interest.com/ Damir Marusic

      Whoops! Good catch on bad clip art.

  • davep

    Check out the Surgery Center of Oklahoma . Transparent pricing, no insurance and prices a fraction of so-called “Non-profit” hospitals. I am not associated with them.

  • JD

    As you mention, transparency isn’t very effective when you have a 3rd party paying the bill. The consumer needs to pay a greater share of the bill. HSAs move us in that direction.

  • Lorenz Gude

    I’ve been commenting here and elsewhere that US medical costs are double what they should be for years. I recently complained again on this forum and mentioned the Time article Bitter Pill by Steven Brill. Perhaps I finally got through or Mr. Brill did all on his own. I do not care. It is just so good to see Americans finally understanding what every travel agent outside the US knows – Travel Insurance for travel in US costs twice as much because healthcare in the US costs twice as much. The most interesting thing to me in Brill’s article is that the US healthcare industry spends more on lobbying congress than the defense industry does. Good luck with prying their cold dead fingers off 8% of US GDP.