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Health care needs price transparency

Let’s do a simple thought experiment. Pretend that every time you go to the grocery store there are no prices posted for the food products. You have no way of knowing how much anything costs until you get to the check out counter. And when you do get to the check out, someone else pays for over 80 percent of your groceries.

On the one hand, you really don’t care what prices are because someone else is paying for the vast majority of your food. On the other hand, you are still paying for a significant portion of your groceries, so it would be handy to know prices.

This thought experiment defines the current health care system in the United States.

A third party, either the government through insurance programs such as Medicare, Medicaid, and Obamacare, or employers through employee benefits pay for a very significant portion of health care in our current system. Consequently, until recently, prices in health care have not mattered to patients. Americans have been shielded from health care costs. Yet, insurance deductibles and out-of-pocket expenses have been increasing, putting more financial pressure on patients.

At the end of the day, health care is an economic activity, just like buying groceries, or clothes, or shelter. The relationship between a provider and a patient is unquestionably the most personal activity we undertake, however, health care has costs. The one thing that all policymakers can agree on is that the rising costs of health care are unsustainable. We currently spend almost 20 percent of our economy, or gross domestic product, on health care in the U.S. Unless something changes, this number is predicted to reach over 30 percent of GDP in the next 10 to 15 years.

To change this trajectory of increasing health care spending, price transparency is mandatory. Patients must have the ability to act as true consumers of medical care and be able to compare treatment prices from multiple providers. The federal government has mandated that hospitals publish their pricing structure, yet medical facilities have been extremely slow in meeting this requirement.

The first step in controlling health care costs is to give patients, as consumers of medical care, the ability to obtain quality care at the most reasonable price. Competition in pricing is a fundamental of a free market and just as in grocery shopping, Americans should have the right to know prices for their medical care.

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