The Institute of Medicine estimates that $105 billion of annual waste in health care spending can be attributed to lack of competition and excessive price variation. A lack of public information on the price of health care services contributes to this waste by denying employers, purchasers, and consumers the information they need to make smart choices.
This brief from the Pacific Business Group on Health explains the problems created by the lack of price transparency and outlines what can be done to reveal health care prices more. The brief recommends that state and federal government work with the private sector to develop and implement public policies ensuring health care markets support consumers and purchasers using price information. The following are specific state- and federal-level policy recommendations:
State-Level Policy Solutions
Federal-Level Policy Solutions
The brief also suggests that while necessary, revealing the price of health care services will not be enough to drive the significant change required to improve health care outcomes and reduce costs. Price transparency is instead a foundational element that needs to be combined with the appropriate consumer and provider incentives, such as value-based benefit design or the reference pricing of services.