Opinion: Transparency, competition for health care

Sarah Lee

It’s no secret Americans are worried about the rising costs of health care. Over the next decade, health care costs are projected to grow at an average rate of 5.5 percent per year and reach a total of $5.7 trillion by 2026, according to data from the Centers for Medicare and Medicaid Services (CMS). Additionally, a recent Kaiser Family Foundation poll indicates rising health care costs remain a primary issue for voters.

While 42 percent of those polled in the Kaiser survey said they think President Donald Trump’s strategy of asking drug companies to slash prices will be effective in bringing the cost of drugs down, if drug companies can’t be compelled by government to lower prices (and they shouldn’t be), what else can be done to lower the cost of health care?

One tried and true solution is increased transparency and competition within the health care industry, a strategy already embraced by some states looking to make health care more affordable and accessible.

Lee writes: "Consumer choice, not government mandates, is the way to fix America’s broken health care system."

For example, in New Mexico, a health care transparency database was recently developed by Think New Mexico and the state’s Department of Health. The database publishes the cost of common procedures offered in the Land of Enchantment’s 44 hospitals, which New Mexico officials say will spur competition by informing consumers, thereby limiting cost increases and improving quality of care. The database lists the average prices paid by Medicaid for nine common nonemergency procedures and provides quality metrics for state hospitals, such as data on 30-day readmission rates and patient-provided quality ratings.

Fred Nathan, founder and executive director of Think New Mexico, says health care is more expensive than it should be, and part of the reason for that is a lack of transparency in pricing.

“Information about price and quality is essential to almost every market transaction,” Nathan said. “The lack of transparency around the cost and quality of health care means that it is more expensive than it would otherwise be. We believe that the most important outcome from New Mexico’s health care transparency initiative will be to incentivize hospitals to compete to improve their quality and drive down costs.”

The database benefits consumers, Nathan says, by publishing the cost of procedures, which in turn incentivizes doctors and health care facilities to lower prices to remain competitive.

Although New Mexico has successfully enacted a health care database, other states are finding the process more difficult. Republican Gov. Rick Scott has been trying to create a similar database in Florida, but his efforts have been met with pushback from health care industry groups, which are still refusing to provide health insurance claims information.

Residents of the Sunshine State, as well as every other state in the nation, ought to demand the creation of a health care database and other reforms that would make health care more transparent and affordable. Consumer choice, not government mandates, is the way to fix America’s broken health care system.

Sarah Lee is the managing editor of The Heartland Institute’s Health Care News.