Testimony presented before the U.S. House of Representatives Committee on Ways and Means on May 16, 2023.
Christopher Whaley, Economist
The United States leads the world in health care spending, largely due to high and variable prices. Rising spending strains government finances, as well as erodes worker wages and other benefits, particularly for lower income Americans. Health care prices are opaque, fueling consolidation activity and leading to patient frustration with the current state of the U.S. health care system.
My research has shown how entrepreneurs and innovators can use price transparency data to improve health insurance benefit design and create competition in health care markets. An appropriate use of price transparency is not a magic wand for the health care system or as a way to burden patients with navigating the complexities of the U.S. health care system, but rather as a hub that enables other benefit design innovations and policies that will reduce health care spending and improve health care quality.
To allow for these types of initiatives to happen nationwide, recent federal policies seek to increase access to price transparency data through two main requirements. First, there is a requirement that hospitals must post prices for roughly 300 shoppable services. And second, insurers are required to put prices for their negotiated rates. Unfortunately, each policy has important implementation barriers that limit effectiveness. Roughly 75% of hospitals are actually noncompliant with policies to post prices.
With many hospitals actually not posting any data at all, or hospitals that do post, posting incomplete or inaccurate data. The state of Colorado recently implemented a policy where hospitals that do not comply and do not post prices aren't allowed to go after patients for medical debt.
Finally, compliance to requirements could be like many other data reporting requirements, a condition for participating in Medicare. On the insurer side, file sizes are needlessly large due to duplicate data entries in posting of prices for providers who don't actually perform services. This means that much of the data is unfortunately not accurate. Requiring insurers to limit posted prices to providers who actually perform services or include the volume of services that providers build could be one way to actually improve the use of this data and to improve data quality.
