Study: Transparency and choices may not cut health costs
Increasing price transparency and offering consumers more choices would do little to bring down health care costs.
That’s according to a study published Friday by the Health Care Cost Institute, which advocates free-market economics in health care.
The analysis found that so-called “shoppable” services – meaning costly procedures that can be scheduled in advance – accounted for only 7 percent of consumers’ out-of-pocket costs.
So even if consumers could generate savings by shopping around, it would only represent a small piece of the health-care-spending pie.
“Overall, the potential gains from the consumer price shopping aspect of price transparency efforts are modest,” the authors wrote in the report.
The study comes amid a heated debate in Tallahassee over how to stem exploding health care costs.
On Wednesday, the House approved a series of free-market policies intended to encourage competition, decrease costs and increase access to health care, including a proposal to create sweeping price transparency requirements (HB 1175).
The House also passed a bill creating “recovery centers” where patients can heal after surgery, and lengthened the amount of time patients can stay at ambulatory surgery centers (HB 85).
What’s more, Republican Gov. Rick Scott, a former hospital executive, has been leading the charge against price gouging, and asking Floridians who received wild bills to share their hospital horror stories.
It is unclear if the proposals will be heard on the Senate floor in the final week of the legislative session. Senate President Andy Gardiner, R-Orlando, said he plans to bring some of the bills up for a vote. It appears a health care transparency bill could get a vote, although the recovery centers likely will not.
But the study from the Health Care Cost Institute adds to the growing number of voices questioning whether the efforts would have much impact at all.
Though the Washington-based Health Care Cost Institute has spoken up on the issue before, the group has been a favored speaker at both the governor’s and the House’s affordable health care panels.
But speaking up may actually work to the detriment of HCCI, which publishes a database called Guroo.
On Thursday, the representatives who drafted the House transparency bill said they had HCCI in mind as a vendor that could create a statewide healthcare database.
Rep. Chris Sprowls, R-Palm Harbor, said he first heard of the group at a meeting of Scott’s Commission on Health Care and Hospital Funding. It’s the only organization Sprowls knows of that could meet steep requirements in the bill, which does appear to be headed to the floor of the Senate.
The organization does not appear to have contributed to political campaigns in Florida.
The analysis was based on a large sample of insurance data from 2011.
It found that only about 43 percent of the overall health care spending that year ($524 billion) went toward shoppable services, such as hip and knee replacements. And only about 15 percent of that spending ($37.7 billion) came out of consumers’ pockets.
The authors also pointed out “logistical and incentive roadblocks” that would prevent the full realization of price transparency.
“If an individual is very sick he or she might not be able or willing to shop for services,” they wrote, adding that it might also be dangerous for consumers to shop around for prescription drugs without knowing how they interact.
Their conclusion: Consumers will have difficulty altering the lion’s share of their out-of-pocket spending.
“Though one important feature of properly functioning markets is the availability of both price and quality information, consumer activity driven by this information should not be the focus,” they wrote.
This isn’t the first time the Health Care Cost Institute has raised doubts. Earlier this year, the group’s executive director David Newman told the Times/Herald that increasing transparency could potentially cause prices to increase over time.
"What happens is the range of prices narrows and the average price goes up," Newman said.
The study also validates the opinions of Republican Senate leaders, who have for almost a year argued that free-market ideas won’t make much impact in access to health care, although they might increase competition in some areas. They pushed for Medicaid expansion last year before it was shot down by the House in a June special session.
“If you don’t have insurance, it doesn’t matter how many innovative programs you make,” Gardiner said before the legislative session began. “You still don’t have access."