Healthcare Price Transparency: Policy Approaches and Estimated Impacts on Spending

Source: Chapin White, Paul B. Ginsburg, Ha T. Tu, James D. Reschovsky, Joseph M. Smith and Kristie Liao, Gary and Mary West Health Policy Center, Policy Analysis, May 2014

Healthcare price transparency discussions typically focus on increasing patients’ access to information about their out-of-pocket costs, but that focus is too narrow and should include other audiences—physicians, employers, health plans and policymakers—each with distinct needs and uses for healthcare price information. Greater price transparency can reduce U.S. healthcare spending. For example, an estimated $100 billion could be saved over the next 10 years if three select interventions were undertaken. However, most of the projected savings come from making price information available to employers and physicians, according to an analysis by researchers at the former Center for Studying Health System Change (HSC). Based on the current availability and modest impact of plan-based transparency tools, requiring all private plans to provide personalized out-of-pocket price data to enrollees would reduce total health spending by an estimated $18 billion over the next decade. While $18 billion is a substantial dollar amount, it is less than a tenth of a percent of the $40 trillion in total projected health spending over the same period. In contrast, using state all-payer claims databases to gather and report hospital-specific prices might reduce spending by an estimated $61 billion over 10 years….