Designing Transparency Systems for Medical Care Prices

March 10, 2011

In the contentious political environment surrounding health care reform, calls for increased price transparency in health care are among the few areas of general agreement. In each of the past 2 years, leading congressional Democrats and Republicans have introduced legislation to mandate price transparency. According to the American Hospital Association, 34 states now require reporting of hospital charges or reimbursement rates, and 7 states provide a forum for voluntary price reporting. The rationale for price transparency is compelling. Without it, how can consumers choose the most efficient providers of care? But though textbook economics argues for access to meaningful information, it does not argue for access to all information. In particular, the wrong kind of transparency could actually harm patients, rather than help them. (NEJM)