​Cost Transparency: Does it Help Patients Become Good Shoppers?

Most people have no idea how much their mammogram costs, or their prescription for cholesterol medicine, or what the surgeon charged for removing their appendix. They pay the copay and other out-of-pocket expenses, and that's as far as it goes.

With the rising cost of copays, and plans increasing their deductibles, out-of-pocket expenses are skyrocketing. But if consumers could learn ahead of time how much they would owe, they might become savvier shoppers.

Some consumer advocates, employers and health plans have pushed for more transparency in pricing to encourage consumers to be more selective of providers who can offer low-cost and high-quality care. Some also believe greater transparency can promote competition among healthcare providers based on the value of care. Because of this, the number of state legislatures looking to improve transparency in healthcare costs and provider payments has grown over the past two decades.

No Consensus on Transparency

There are decidedly mixed opinions on this subject, and studies and surveys have shown no consistent results on whether or not consumers would actually price shop if given the option and the tools. Would providing more transparency really cut healthcare expenditures and foster better value? Or would it simply put an extra burden on the patient—trying to figure out cost and quality—for no good reason?

In a survey of more than 2,000 consumers published last year by TransUnion Healthcare, nearly 75 percent of respondents reported that receiving estimated costs upfront would positively impact their view of a healthcare provider. In addition, 43 percent of respondents said that it was somewhat or very difficult to obtain cost information, while 21 percent said that they had never tried to get information on cost.

similar survey conducted by Public Agenda in 2016 also found great interest in obtaining information about cost. The survey revealed that half of Americans had tried to find healthcare price information before receiving care, and 20 percent had actually compared costs among different providers. Most of those who had comparison price shopped said they saved money, but the survey also found that 28 percent of Americans have tried to find out a single provider's price rather than comparing.

However, another study conducted by the Bureau of Economic Research in 2015 found somewhat different results. Researchers evaluated healthcare utilization when a large self-insured company required all of its employees to switch from a plan that provided free healthcare (zero deductible) to a high-deductible plan (which included a health-savings account). They found that overall, employee healthcare spending dropped by about 13% annually, but this was not due to price shopping. Instead of shopping around or avoiding unnecessary procedures as a blanket policy, patients simply reduced their use of healthcare altogether. In fact, the researchers actually observed a shift to more expensive providers, and this occurred despite the fact that employees were offered a tool with which they could search for providers and compare costs.

Barriers to Price Shopping

So the results are somewhat mixed; while enabling cost transparency may be a move in the right direction, it is certainly not a panacea for curbing healthcare spending. For the most part, pricing continues to be largely determined by factors that are beyond the control of the patient. Patients may also be restricted to seeing providers within their insurers' networks, which would give them less leverage for price shopping. Concerns about the quality of care are also important, and must be factored into the equation.