Competitive pricing is one of the most important aspects of a capitalist economy. While the U.S. economy has always had a capitalist structure based on supply and demand, our healthcare system has mostly functioned outside of the norms that keep other industries thriving and in check.
The principles of competitive pricing are simple. By having advanced knowledge of the cost and apparent value of the items they are purchasing, consumers can shop around to find the best prices for the items they want or need. This, in turn, pushes businesses to keep their prices as low as possible or to improve the value of the products or services they’re selling.
So what keeps prices in check within the healthcare industry, where almost no one knows the price of care until after diagnosis and treatment? It’s a good question without a clear answer.
With the way the U.S. healthcare system has operated in previous decades, few patients knew more than their copay cost when it came to their treatment—they just knew they needed healthcare. Even if the issue was as small as a common cold, with predictable treatment options, the final cost for care remained a mystery for most patients, they paid their copays and left the rest to the insurance companies.
Considering recent challenges with the health insurance market and other alarming trends in the industry, like the continued growth of healthcare spending in the U.S., changing the way we communicate about the cost of care and patient billing is becoming a necessity.
True healthcare price transparency is the first step towards lowering costs and forcing providers to keep their prices competitive. Simply attaching direct and simple prices to certain services and making that information available to the public will help push the healthcare industry into greater efficiency and improve patient control over their own health and well-being.
According to a recent article from the Robert Wood Johnson Foundation, “More and more people are becoming increasingly curious about the price of their health care, and understand that more expensive does not necessarily mean better. But people still do not realize that health care prices vary significantly between providers for the same services.”
As consumers become more informed about the fluctuations in costs between providers, they are going to want more information in order to make the best decisions for their families. With insurance deductibles and premiums on the rise, patients have good reason to become more concerned about insurance payouts and patient billing processes than ever before.
The Kaiser Family Foundation found that the average premium for health insurance coverage in the U.S. has risen by 69 percent in the last decade. At the same time, healthcare spending, though slowing, is still expected to cover roughly a fifth of our country’s GDP by 2025. Without healthcare price transparency and a concentrated effort to make the industry more competitive overall, these issues will only grow.
Ultimately, the cost of medical treatment shouldn’t be a great mystery to the general public. Patients have a right know what they’re paying in advance, at least in a general sense, and to clearly understand what services those charges entitle them to.
Even more important is the fact that the U.S. was designed to encourage competition between businesses, so that prices would stay reasonable for consumers. Why, then, should the healthcare industry operate any differently?
With the recent trends in the industry and the need to encourage greater competition between providers in order to drive down costs, healthcare price transparency may be the best way to begin making long-term changes to the way our healthcare system is run—changes that will improve the level of care patients can expect at prices they can afford.