Wait A Minute: Could Price Transparency Do More Harm Than Good?

Soon the state of Massachusetts, which has taken a leadership position in the struggle to improve access to care, will begin testing a concept long-advocated by proponents of consumer-driven healthcare: price transparency.  According to the Boston Globe: “[C]onsumers soon will have access to information long kept confidential by the healthcare industry: The prices individual hospitals are paid by insurers for performing specific procedures - data state officials hope will encourage comparison shopping and reduce medical costs.”  (Free registration required to view article.)

Some observers have praised this move, saying that this information will help people become better “consumers” of healthcare because they will start to select hospitals based on the quality and price. 

However, there are two potential problems with this approach:

1.    Low-cost hospitals may actually raise the prices they charge for procedures in order to match those set by more expensive institutions

2.    Access: What if a consumer finds a higher quality, less expensive hospital, but it is more than 50 miles away from where they live?  Will traveling to the hospital be worth it?

No one knows whether and how this experiment will work.  Nevertheless, it will be an interesting trial for those advocating market-based solutions to the cost and quality problems plaguing our health system.

What's your take?