{
  "id": "RL34101",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL34101",
  "active": false,
  "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department",
  "versions": [
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      "source": "EveryCRSReport.com",
      "id": 343813,
      "date": "2008-04-29",
      "retrieved": "2016-04-07T03:28:24.558142",
      "title": "Does Price Transparency Improve Market Efficiency? Implications of Empirical Evidence in Other Markets for the Health Sector",
      "summary": "Consumer advocates, proponents of wider use of market incentives in the health care sector, and some policy makers have called for greater price transparency. These measures might include posting prices in an accessible form or regulations constraining price discrimination (different prices charged to different customers). Price transparency implies that consumers can obtain price information easily, so they can usefully compare costs of different choices. Price transparency may also mean consumers understand how prices are set and are aware of price discrimination. In health care markets consumers often have difficulty finding useful price data. In particular, few consumers have a clear idea of what hospital stays or hospital-based procedures will cost, or understand how hospital charges are determined.\nMany empirical studies have investigated how changes in price transparency have affected various markets. Most of this evidence, largely relating to advertising restrictions and lower search costs on the Internet, suggests that price transparency leads to lower and more uniform prices, a view consistent with predictions of standard economic theory. If this evidence could be applied to the health market, it would suggest that reforms that increase transparency would reduce prices. In cases involving NASDAQ and Amazon.com, public reaction created pressure to change pricing strategies. A few studies, involving intermediate goods in one case and less clearly identified advertising effects in others, found that transparency raised prices.\nHowever, the special characteristics of the health market make it difficult to directly apply empirical evidence gathered from other markets. These characteristics include limits on competition among hospitals, complicated products that vary in quality, intermediate agents (physicians) who make choices, and third-party payment of costs through insurance. The dispersion of prices for similar health care procedures is high, which suggests that these markets are not working well with respect to price outcomes, as would be expected in ordinary competitive markets. In addition, prices paid by different types of payers vary dramatically. On average, patients without insurance or who pay their own bills pay much more relative to what private insurers, Medicare, and Medicaid pay.\nDespite these complications, greater price transparency, such as accessibly posted prices, might lead to more efficient outcomes and lower prices. Some markets where lifting advertising restrictions led to lower prices also involved complicated products such as eye care, suggesting that the complex nature of health care may not be a barrier to benefits from price transparency. Internet comparison shopping sites also appear to have lowered prices for many products. Better price information might allow patients, either directly or through their physicians, to obtain better value for health care services. Several states and health insurers now provide online data on hospital costs. These price transparency initiatives, at least so far, have had little visible effect on pricing. Public pressure, which in some cases has caused hospitals to curtail aggressive bill collection tactics, might change hospitals\u2019 and health care providers\u2019 pricing behavior. This report will be updated as events warrant.",
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    },
    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc817613/",
      "id": "RL34101_2007Jul24",
      "date": "2007-07-24",
      "retrieved": "2016-03-19T13:57:26",
      "title": "Does Price Transparency Improve Market Efficiency? Implications of Empirical Evidence in Other Markets for the Health Sector",
      "summary": null,
      "type": "CRS Report",
      "typeId": "REPORT",
      "active": false,
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      "topics": []
    }
  ],
  "topics": [
    "Economic Policy",
    "Foreign Affairs",
    "Health Policy"
  ]
}