The Trump administration wants to increase price transparency in health care—just like every other sector of the economy.
No disagreement from us. But the first question is why real prices aren’t already readily available to health care consumers—just like every other sector of the economy?
Actually, they are—for health care products and services for which health care consumers pay out of their own pockets. Over-the-counter drugs, flu shots, cosmetic and Lasik eye surgery, and the few direct-pay doctors’ offices and hospitals all make their prices readily available—and competitive. So it can, and does, happen in health care.
But that kind of price transparency only occurs where people pay out of their own pockets.
In the vast majority of instances, when patients go to the doctor, hospital or pharmacy, a third party is paying most or all of the bill. In those cases, patients’ primary concern is not the price of the service but their out-of-pocket costs.
For example, I recently made an appointment with my doctor for a physical. In an effort to promote preventive care, Obamacare requires insurers to cover 100 percent of that cost.
While there the office noticed I had not had the new pneumonia vaccine and offered that option. They told me the cost would be $299, but my insurance would pay it—another part of Obamacare’s preventive care provision.
While $299 seemed a little steep, “free” was just the right price. I said yes.
I don’t know how much the physical cost, and—apart from an academic interest—don’t really care. I do know how much the vaccine cost, but don’t really care about that either.
If I were paying out of pocket, I would care immensely.
Which highlights the challenge of forcing price transparency. For it to be widespread, consumers, not government, will have to demand it. And that will likely only happen if health insurance becomes real indemnity insurance, indemnifying the patient rather than providers.
The goal should be a health care system that encourages patients to be more value-conscious shoppers in the health care marketplace. If and when that happens, consumers, rather than government, will demand price transparency.
President Trump is trying to move us in that direction, but it won’t be easy. The health care system has been dysfunctional for a long time, and Obamacare made it worse.