In Health Care, Transparency May Affect Prices, but Not Patients’ Bills

... but patients’ bills aren’t shrinking accordingly

Christensen, Floyd, and Maffett argue that price-transparency policies focusing on hospitals’ initial charges ignore a more meaningful aspect of the billing process: the discounted rates for medical procedures that are privately negotiated between hospitals and insurance companies. Looking at billing data for more than 2 million instances of the medical procedures in the charts above, the researchers find that while initial charges decreased in places affected by transparency regulation, the negotiated payments ultimately paid by patients and their insurers did not significantly change—suggesting that the reduction in charges is being offset during that negotiation with insurers. The researchers say that while this practice might allow hospitals and policy makers to demonstrate responsiveness to public concern about rising health-care costs, it has little effect on the actual charges being paid.