economy
Washington's Bet on Hospital Prices Backfired
Washington's strategy to compel hospitals to disclose prices, expecting a competitive market to emerge and lower costs, has proven ineffective five years later. Despite the vast amount of posted data, a true market has not materialized, and prices have not decreased. Researchers found no instances where major insurers paid hospitals a uniform, fixed price for both inpatient and outpatient services. The disclosure has occurred, but the intended market has not.
TL;DR
- Hospital price disclosure laws have not led to market formation or cost reduction.
- Disclosed prices reflect bargaining power, not actual costs, especially in concentrated markets.
- Existing regulations and benchmarks have failed to discipline prices, often acting as price floors.
- Buyers can create a more effective market by setting a single, realistic price for services.
- External market acts by buyers, not further regulation, are needed to control healthcare costs.