Steps to Increase Price Transparency

Summary by The Market Institute

Transparent-Market1The Center for American Progress recently published a brief detailing their opinion on how hidden health care costs are hindering market competition and ultimately making healthcare expensive for consumers. Unlike almost every other scenario in which a consumer receives an estimate for services, health care prices are not realized until after services rendered. This allows for patients to have virtually no idea what their care will cost. Even in cases where prices are listed prior to care, they typically mean little to the patient because out of pocket costs are not known. Health care prices must be transparent in order to transform the whole system and make it cheaper for consumers.

In the case of physicians, doctors make referrals without knowing the prices charged by other providers; they select medical devices for use in procedures without knowing the costs of the products or whether less-expensive alternatives may produce similar or even better outcome. There are promising changes to transparency, over 30 states have enacted legislation requiring providers to state some sort of minimum cost to patients and recently Centers for Medicare and Medicaid Services released large amounts of Medicare claims data for the first time. Despite these advances, there is more to be done to make health care costs less opaque. The Center for American Progress recommends the following:

  • HHS must ensure that the Affordable Care Act’s requirement that insurers provide cost-sharing information is implemented in a consumer-friendly way.
  • The ACA’s cost-sharing disclosure requirements should be modified so that the plan’s quoted costs for episodes of care are guaranteed.
  • HHS should encourage the development of statewide, all-payer claims databases.
  • Hospitals and other institutional health care providers should provide uninsured and out-of-network patients with episode-based costs, which would also be guaranteed.
  • Insurers’ provider directories should include rankings of higher-value providers to encourage patients to seek out their services.
  • Medicare’s Compare websites’ star rating systems should include an overall “value” score for each health care provider, calculated using both quality and price data.
  • Federal law should increase price transparency in the device industry, allowing hospitals and physicians to comparison shop without revealing prices to competitors.


The Obama Administration needs to be more aggressive in implementing transparency provisions of the Affordable Care Act. There is already a requirement for health insurers to provide cost sharing data. Enforcing this requirement would go a long way towards making health care costs more known and ultimately reducing them.
The Market Institute. “Shining Light on Health Care Prices, Steps to Increase Transparency.” DC Rounds. Association of American Physicians and Surgeons, Inc., 5 Apr 2014. Web. 29 Jun 2014.

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