The Definition of Cost Transparency

The Cost of Healthcare is Largely Unknown to the Patients Prior to Treatment

A patient hands over a health insurance card.
A patient hands over a health insurance card. PhotoAlto/Frederic Cirou/Getty Images

Healthcare cost transparency is the ability of the patient to discover how much a particular medical service or treatment costs, preferably before receiving the service or treatment. In practice, the cost of healthcare is largely unknown to the patients prior to treatment. Costs can vary from company to company and also from doctor to doctor and this variation can make it extremely difficult for people to understand the costs of their treatments and plan financially for treatment.

The opaque system can also potentially cost individual healthcare recipients thousands of dollars as they are not easily able to shop around for the best prices, as they would for other products and services.

Cost Transparency in Healthcare Reform Efforts

Cost transparency plays a key role in many proposed healthcare reform efforts. In our current system, patients experience great difficulty in determining the cost of care in advance of treatment. Prices for the same procedure often vary based on whether the patient is insured and (if applicable) who is insuring them. This is because different insurers have negotiated different rates with providers. The result is that the consumer often has no idea how much their care actually costs.

Some experts believe that if this cost information were readily available, patients would be better equipped to shop around for the best price for care, potentially saving thousands of dollars.

Other experts believe that cost transparency could cause patients to forgo medically necessary care if it is too expensive to afford.

Benefits of Healthcare Cost Transparency

Many in the field of healthcare believe that universal cost transparency would greatly eliminate the over-inflated costs of health care in the United States.

With cost transparency, individuals would be able to see exactly how much their necessary treatment would be and then shop around for the best prices for them.

In debates about healthcare reform, our current system is often described as opaque and is, in part, blamed for the ever-rising cost of care in the United States. Many people on both sides of the political spectrum believe that if people better understood the cost of the services and products that they both want and need, they may choose to ration healthcare themselves and make more educated choices about their health.

Potential Negatives of Healthcare Cost Transparency

Some experts believe that there is actually a negative side to healthcare cost transparency. Without healthcare cost transparency, individuals cannot make decisions about treatment based on price. However, with healthcare cost transparency, the patients will know the price of a treatment beforehand, and will be able to make a decision based on price. Thus, some experts believe that individuals will forgo necessary medical treatments because costs are too high.

The Bottom Line

Cost transparency is not the only debate in healthcare reform talks and it certainly would not solve all of the United States' healthcare concerns, but expect it to continue to be a discussion point for politicians and the healthcare industry in the coming years.

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