HCI3 Update from the Field: Price Transparency

Submitted by francois.debrantes@hci3.org on Friday, March 15, 2013 - 01:18

Newtown, CT – March 15, 2013

In most States, consumers are granted protection against unfair trade practices, such as bait and switch, or masked prices. This protection, however, doesn't extend to health care purchases – We all know that health care is consuming about 18% of the GDP, and yet, as frequently reported in CostsOfCare.org, it's virtually impossible to get a straight answer from any provider on the costs of the services/"products" they sell. This comes as a particular surprise to young doctors, most of who have grown up in a world of completely transparent comparison-shopping. And it comes as a shock to those who are on the receiving end of thousand dollar bills after a common procedure. Large employers, in response to employee angst about the lack of health care pricing, have started to take action by deploying tools that provide some of this information, but these tools often lack adequate sample sizes from which to calculate reasonable estimates of episode costs. Some plans have also responded, albeit generally very meekly. And some states have instituted laws that require a certain level of pricing information for consumers. However, as our soon-to-be-released State Scorecard on Price Transparency shows, the vast majority of states in the US have woefully inadequate laws. The best (and there are only TWO) provide one to two year-old pricing information on a small set of procedures, and even try and tailor the information to a specific health plan product with a defined deductible and co-insurance. That's pretty good, but falls short of the type of consumer price protection afforded in almost all other areas.

What this means to you – The price per unit of service and, as a result, the total price per capita for private sector health care consumers has far far outpaced inflation. And why should we expect any less when there's no price transparency? Now, some will say that unit price or even episode price is not what we should focus on, but rather total price of health care. Well I'm certainly not a PhD mathematician, but the last time I checked the total price of health care was the simple sum of the product of each service by the price of that service. Granted, the price for one unit can be low, and the total price high because there are lots of units delivered. But the opposite can be true as well. The total number of units can be low and the price per unit so outrageous that the total price is very high. The bottom line is that for consumers, what matters is the price per episode, and they should have an unalienable right to that information at the point of need and presented in a manner that relates to their plan benefit. And here's the naked truth. Plans such as Aetna have developed tools that do just that. But it's done in a very limited fashion. As such, there is no technical impediment to providing this information to consumers. It's simply a deliberate choice not to do it. So we either continue asking for transparency from those who have made a deliberate choice not to provide it, or we ask State Legislators across the country to enact laws that provide health care consumers the same rights that they have for all other purchasers. Which will you choose?


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org