OPINION: The Lack Of Price Transparency In Health Care Is A Problem For Free Markets
The Trump administration just finalized a rule requiring drug companies to including price information in ads. And the president recently announced his administration’s efforts to curb surprise medical billing. These are both positive developments that fit within a broader push for price transparency — a push that should have the support of free-market conservatives.
The political left has its answer for high health care prices: “Medicare for All.” In an effort to eliminate complexity (and profits) from American health care, Medicare for All would replace today’s various private insurance coverage options and government programs for vulnerable groups with one single program for everyone. This approach would have disastrous consequences for the quality, timeliness and innovation we presently enjoy in our health care sector. But it is simple and sounds appealing to those frustrated with the uncertainly and fear created by our costly and opaque status quo.
So what’s the answer from the right? For years, the mantra has been “patient-centered, market-driven health care.” And the principle is right! But there ought to be a swear jar for “let the market solve it.” This answer is not a real policy solution, nor is it satisfactory to American voters, who don’t have faith that simply rolling back government spending and regulations in health care will lead to better outcomes. We are so far away from having a functioning market in health care that it is understandably hard for many to imagine what they would look like and how they would work.
Markets do develop organically, and they are the best means for allocating resources and fostering innovation. But markets can’t develop where the conditions aren’t right, just like seeds can’t grow in rocky soil. It’s time to till the soil.
One condition that’s needed for a functional market is price transparency.
Look at any service, drug or treatment that’s available directly to consumers and offered with price transparency, in health care or anything else, and you will see a pattern. Prices get lower, not higher, and patients are satisfied: The cost of Lasik eye surgery has decreased by 75 percent over 15 years. Claritin, the allergy drug, saw its price drop 50 percent when it became available over the counter. And today Direct Primary Care, a model where patients pay doctors directly, without insurance, is affordable and growing in popularity across the country.
But in too much of the healthcare system, we don’t have price transparency because we don’t have a functional market. Conservatives are right when they point out that the current lack of price transparency is no natural development: It’s the result of too much government intervention requiring that too many health care services be purchased like a group lunch, either through programs like Medicare and Medicaid or through insurance. They are also right when they say that structural reforms that reduce the role of third-party payers will lead to greater price transparency as patients do more direct purchasing and demand greater price competition from providers.
However, this kind of structural free-market reform is currently out of reach. The latest try, as demonstrated by efforts to repeal and replace the Affordable Care Act, failed spectacularly. We could repeal ACA, as well as the employer tax exclusion for health insurance, as well as Medicare and Medicaid, and then of course we’d have price transparency in health care. But this would be a heavy lift, politically, to say the least!
A more feasible solution would be to follow the approach that the Trump administration is taking, using sunlight as a disinfectant. We, as patients and consumers, deserve to know ahead of time how much we should expect to pay for healthcare services — functional market or not. We deserve to know how much our insurance company is paying on our behalf; after all, we pay bills to them. And we deserve to see how various providers differ in terms of what they charge so that we might make choices based on value. We can’t have patient-centered, market-driven health care otherwise.
If we don’t take action to expose the convoluted payment pipelines in American health care, the left will succeed in delivering its false narrative, blaming free-market capitalism for the failures we all feel today. This will pave the way for single payer unless we can correct course with better information.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.