The Case for Healthcare Cost Transparency
STEPS: Science, Technology, Engineering, & Policy Studies 2014; 1:PS1-7
Healthcare makes up nearly 18% of the US economy, with expenditures of $2.7T annually. Although the rate of growth of healthcare costs as a percent of GDP has moderated in recent years, it has risen from 13.8% of GDP in 2001. Slowing the growth of healthcare costs is indeed a critical national priority. In just the last few years, there has been a sea change occurring in the health insurance market, with consumers and patients being increasingly required to take on a larger share of their healthcare costs. These new insurance paradigms, such as reference pricing, coinsurance, and high deductible plans (e.g., “consumer-directed health plans”) will require consumers to have access to tools to be able to make sound decisions, including what their out-of-pocket costs will be. Additionally, the rollout of the Affordable Care Act’s health exchanges with the resultant increase in the number of newly insured, will have many consumers for the first time being made aware of the substantial out-of-pocket costs they will incur besides just insurance premiums. What is now badly needed is price transparency, something that has historically been lacking in the healthcare industry. The combination of greater cost sharing and transparent pricing will create a true healthcare marketplace and should result in lower costs, as consumers price shop and increasingly elect lower cost providers and treatment alternatives. In order to facilitate the movement towards meaningful healthcare cost transparency, five distinct policy initiatives are recommended.
Key words: healthcare, transparency, insurance