The only health care prices that matter to consumers
The most important detail to watch in the regulations for President Trump's executive order on price transparency for hospitals: will they require that insurers give consumers information on out of pocket costs in a timely and usable way?
Why it matters: That kind of timely information will be needed in the regulations — which have yet to be written — so consumers can shop based on the costs they will actually pay.
The big picture: One big reason general information on prices has only limited utility to consumers is that what they most want to know is not the price of an MRI, or a knee replacement of any other service at this hospital or that, but what they will have to pay for it themselves out of pocket under their insurance plan.
Some insurance companies have tools consumers can use to figure this out, but that information is not easily available to consumers today. As a recent Kaiser Family Foundation/Los Angeles Times survey shows:
- 67% of the American people say it is somewhat or very difficult for them to figure out what a treatment or procedure will cost them.
- 44% said they had difficulty determining what they would actually have to pay.
- 40% had problems figuring out what was even covered.
Even with the right information, larger medical expenditures generally occur when people are in a medical crisis of some kind, in anything but shopping mode, and generally dependent on their physicians to direct them to hospitals, specialists or tests they need. This is why price transparency and shopping is helpful for some services but not a panacea.
- It’s not entirely clear whether low rates of price shopping today reflect the lack of price and quality information, or larger barriers to shopping in health care. Just 17 percent of people with typical deductibles shop today, and 21% with high deductible plans. More price transparency will drive these numbers up, but how much is unknown.
- On the other hand, there is some evidence that people want to shop when they can: 47%, for example, asked for a generic drug to save money in the past year; and 36% checked with a provider or health plan on the cost of an office visit.
- But just 23% used an online tool to compare provider costs. All told, 70% reported some shopping-like behavior in the survey.
It's important to add that the ability to shop based on price is not equally distributed throughout the population. If you are in a rural area, limited to a narrow network of providers, or dependent on emergency rooms or clinics, you may have very limited options to shop around.
The bottom line: Like putting price information in drug ads, the executive order may not have much impact in terms of actually lowering prices, but it will focus greater attention on high medical prices. That is likely the main reason for industry resistance, and potentially its greatest contribution.