Health Care Price Transparency Report: Missouri Gets an “F”
Last year the Show-Me Institute published a report that explored some of the reforms Missouri needed not only to make Medicaid better, but also to make health care in the state better for everyone. One prominent reform mentioned was price transparency in medicine. One of the big reasons that prices for health care have spiraled out of control over the years is that, generally, patients don’t see the price of their care and don’t have clear incentives to price shop. You wouldn’t buy a cell phone without investigating what the fair price for it would be, and yet that’s largely what we do when we purchase health care.
Without price competition, properly valuing medical services is next to impossible, and findings from the Department of Health and Human Services in 2013 reiterate the point.
For example, average inpatient charges for services a hospital may provide in connection with a joint replacement range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif.
Even within the same geographic area, hospital charges for similar services can vary significantly. For example, average inpatient hospital charges for services that may be provided to treat heart failure range from a low of $21,000 to a high of $46,000 in Denver, Colo., and from a low of $9,000 to a high of $51,000 in Jackson, Miss.
Price transparency in American medicine is the exception rather than the rule when it comes to state policy, and a new report card from the Health Care Incentives Improvement Institute (which focuses a great deal of attention to transparency issues) and Catalyst for Payment Reform hammers this point home yet again. The researchers found that there has been “little progress since last year and, in some cases, regression” at the state level on price transparency matters, and most states received an “F” grade overall on the matter. Missouri was one of those states. The report doesn’t say a great deal about Missouri’s lack of progress on transparency issues in its national report, altough it does note that “a gag clause ban was introduced in Missouri, but failed to pass in February 2014.” That bill, SB 847, also included a wide array of other welcome transparency measures; unfortunately, the bill never made it out of committee.
As the HHS data lays out, the vast divergence in pricing in health care is a serious problem that isn’t explained by quality differences, but by limited information and, in general, limited incentives to mitigate the cost of one’s health procedures. If the state really wants to bend the cost curve of care in the state, Missouri needs to do better in the arena of price transparency and ensure that the prices charged for delivering health care in the state are more accessible to health consumers.
