There are no silver bullets for fixing health care, but few things come as close to the mark as price transparency.
A great health market failure is a lack of clear pricing that patients can use to compare providers. The tax code’s unequal treatment of health spending doesn’t help. But so many ills flow from our byzantine pricing method: fee schedules under which doctors charge different prices to different patients, flat co-pays that discourage rational decision-making.
Big companies buy most of the private health insurance in this country. But, unlike with most other purchases they make, they don’t really know whether they’re getting a good deal. They are in part buying an assurance that the insurer has negotiated the best prices from the best network of doctors.
But even the insurers themselves aren’t quite sure about the value they offer; they can’t compare fee schedules with their competitors without colluding. Ditto for the providers.
The result is a system