How Much Is That Triple Bypass in the Window?

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Matt Yglesias directs me this morning to a column by Peter Orszag promoting the cause of greater price transparency in the healthcare arena. As you may or may not be aware, it’s almost impossible for consumers to find out the price of various procedures, which in turn makes it almost impossible to shop around. This reduces competitive pressure and keeps prices higher:

Several efforts are therefore under way to provide more transparency about health-care prices, with the goal of helping people become smarter shoppers. The Centers for Medicare and Medicaid Services now collect and publish information on prices for prescription drugs (through the Medicare Plan Finder) and for common health services in various areas (through the Health Care Consumer Initiatives). And more than half of states now have publicly accessible websites offering health-care price information.

These efforts have not been overwhelmingly successful. California’s initiative over the past nine years to require hospitals to make certain price data available, for example, has done little to drive patients toward lower-price competitors or to narrow the price distribution, according to an analysis by the Congressional Research Service. A similar effort to increase price transparency in New Hampshire also had little effect. Simply posting prices online doesn’t seem to do all that much.

Well, of course these efforts haven’t been overwhelmingly successful. As Atrios points out, this is partly because most big-ticket procedures aren’t really all that discretionary. If you’re having a heart attack, you get your bypass surgery from whichever hospital the ambulance takes you to.

But there’s another point that’s really a lot more important: most people don’t buy their own healthcare. They have insurance that pays 90% of their costs. Or they have Medicare. Or they have Medicaid. Or they’re too poor to afford healthcare at all. The number of people who literally pay for their healthcare needs on a cash basis and therefore have an incentive to shop around is small. Certainly far too small to have much impact on prices even if they are publicly posted.

I’m in favor of transparency anyway, partly on general principles and partly as an incentive to lower the insane prices that hospitals charge patients who don’t have insurance (often 3x-4x the prices they charge insurance companies). And of course, conservatives want price transparency because it’s a necessary precursor to their nirvana of HSAs and high-deductible insurance policies, in which consumers really would pay for a lot of healthcare services out of pocket. That’s a wet dream that will never happen, but I’m willing to join with them in demanding price transparency anyway. After all, even if there aren’t all that many consumers who shop around for healthcare services, why shouldn’t they be able to compare prices?

But will it have much impact on the overall cost of healthcare in America? Not a chance.

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IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

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