Impact of Price Transparency on Health Care Decision Making
The goal of health care price transparency is to inject previously missing information on prices into health care markets. By enabling cost comparison, price transparency could allow patients to choose lower-cost, higher-value providers. Past work documents local-area variation in health spending, suggesting there is opportunity to reduce overall spending by guiding patients to lower-cost providers. Moreover, higher cost-sharing requirements by health plans may give patients increasing incentive to use price information to reduce out-of-pocket spending. Significant investments in price transparency websites have been made in recent years by states, insurers, and self-insured employers. Yet there remains very limited evidence of how patients use price information and the impact of price transparency tools on consumer health care decision-making and health care spending. This panel will explore the effects of price transparency on outcomes related to health care spending and decision-making. Each of the three papers exploits a quasi-experimental setting in which a price transparency tool was offered by large employers or insurers to their employees and beneficiaries, respectively. The price transparency tools in these analyses are sophisticated and address criticisms of many first-generation price transparency initiatives. For example, they provide actual out-of-pocket costs that patients can expect to pay and episode-level cost estimates. These papers will shed light on the extent to which price transparency tools can effectively engage consumers in the cost of their health care as well as the conditions under which price transparency is an effective strategy towards health care cost containment.