Economic Implications of Health Care Pricing Transparency Regulations Explored by Analysis Group Coauthors
November 25, 2024
In response to rising health care costs, US policymakers have passed legislation to make prices for medical services and prescription drugs more accessible and understandable. Advocates of pricing transparency have argued that it could reduce health care spending by helping consumers select lower-priced options and incentivizing providers to compete on price. Analysis Group Vice President Christopher Ody, Manager Juan Carvajal, and affiliate Christopher Whaley explore this contention in an article published by the American Bar Association, “The Relationship Between Pricing Transparency and Price Competition in the US Health Care Industry.”
The authors discuss the economics of health care decisions, observing that pricing transparency may introduce little financial incentive to price shop for insured patients, who are insulated from most expenses. They also observe that many pricing transparency regulations only provide access to the prices that providers charge and insurers pay, rather than consumers’ out-of-pocket costs. Consistent with these observations, the authors explain that academic publications have found the effect of pricing transparency on consumer choices and health care costs to be mixed and context dependent.