At the heart of our nation’s debate over health care are two questions: Do we currently have a market for health care? Should we have one?
The answer to the first question is easy: No. While the U.S. has a quasi-public, quasi-private health-care system, we do not currently have a strong marketplace for health-care services and treatments. Almost none of the characteristics of a healthy market are present.
Notably, there is little information available about how much treatments and services cost. In other words, there’s no price transparency. Americans notice this when they struggle to get information about their own health-care costs. They’re frustrated and harmed by surprise bills and exorbitant charges.
If we could reform today’s over-regulated and opaque health-care model so that people actually feel empowered to shop and make informed decisions about their health-care treatment, we might have a chance at making the case that a true health-care marketplace will better serve Americans than a government monopoly (i.e. a single-payer system) would. That is, we could answer the second question with an unambiguous “yes.” We could also make health care less frustrating, more affordable and more accessible for all.
Thankfully, the Trump Administration is proposing some regulatory changes aimed at increasing price transparency and making health care more “shoppable.” Comments for these new proposed regulatory changesare due May 3.
This set of reforms ought to have wide support. According to polling from Public Agenda, 56 percent of Americans have tried to find out the cost of their health care in advance, including 67 percent of those with high-deductible plans.
Because most people are insured and want to stick to providers in their insurance network, many just want price information in order to plan ahead rather than to comparison-shop. But of those who have compared prices from multiple providers, 82 percent say they will do so again in an effort to save money. There can be no price competition without price transparency and this is a key contributor to today’s runaway health spending.
Opponents to transparency argue that health care is different: No one is going to comparison shop while he is bleeding on the inside of an ambulance. No one can stop to ask questions about charges when she is unconscious. No one wants to know the price when a child’s life is on the line.
Of course, this picture is accurate, but it’s incomplete. In urgent, unexpected situations, prices don’t matter as much. That’s why health insurance is a good idea. That’s what insurance is for in any context, as we see with homes and cars, too. It’s intended to be a backstop against catastrophic costs we didn’t expect to incur.
But much of health care is not urgent; it’s expected. It’s something we can plan for. In a forthcoming book, “The Price We Pay,” health-care expert Marty Makaray, M.D., says 60 percent of health care is “shoppable.” For those services and treatments, we ought to be able to get more price information and we ought to have control over more of our dollars.
In addition to giving people more access to health-care prices, policymakers should be seeking ways to help them save and pay for their own health-care expenses. That’s another piece of the proposed regulations: they remove restrictions the limit Health Savings Accounts to particular types of qualified insurance plans.
Anyone ought to be able to save tax-free for health expenses, no matter what insurance coverage she has. More health-care services ought to be paid for directly using HSAs; cutting out middlemen would aid price transparency, reduce bloat and empower patients and doctors to focus more on health and less on coding, billing and paperwork.
Of course, price information can be misused: One frequent misunderstanding about health-care prices relates to Medicare rates, which are not prices. Medicare, the program that insures practically all Americans over the age of 65, reimburses providers much less than the payments that private insurers provide.
Undoubtedly, proponents of Medicare for All will hold up low Medicare rates as the ideal prices for all treatments and services. But there’s an important difference between price transparency and price setting. Setting prices too low leads to shortages, which would be devastating to patients who need services and treatments that would no longer be available.
Instead, patients deserve to know more about how much various services actually cost. In any other market, this is a basic expectation. Americans are smart enough to shop for value in health care as we do for other goods and services. We simply need the information and freedom to do so.