What Would Happen If Hospitals Openly Shared Their Prices?

Price transparency tools with useful, easy-to-use information can benefit patients and reduce healthcare costs

Imagine there was a store where there were no prices on items, and you never knew what you’d pay until you’d picked out your purchases and were leaving the shop. You might be skeptical that the store would have any incentive to offer reasonable prices.

This exact situation has become the norm in U.S. healthcare, at least for those people who lack publicly provided health insurance. Meanwhile, American healthcare prices are, by many measures, the highest in the world.

Hospitals have resisted disclosing prices, leading policymakers to consider laws requiring price transparency. This issue has taken on increasing urgency, as patients face increasing out-of-pocket costs. In addition, prices vary widely across hospitals. The same lower limb MRI can cost $700 at one hospital and $2,100 at another. This means that there are large potential savings if patients switched to less expensive options.

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Complications in the provider/patient/payer relationship

It is worse than you think. Each individual health care provider makes a “charge master” with each individual insurance company. Medicare will only pay 50 cents for the aspirin but “Mike’s Hospital and Juice bar” makes a deal with “Bill’s low cost health insurance” for the charge for two Aspirin at $2.50. Then “Cadillac Health Coverage” comes in and agrees to pay $30 for the same thing. Mike’s decides to charge full price as $30 since that is the highest price anyone would be willing to contract at UCR (Usual Customary and Reasonable) cost.

This works great for anyone on Cadillac’s or Bill’s insurance but the regular uninsured patient is the only patient that ends up paying $30 for two stinking aspirin. This is the practice that is being protected. This is the practice that drives the unreasonable cost of health care.