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Health care price transparency law may be helpful but it’s unlikely to make care cheaper

Stethoscopes via Wikimedia Commons

Beginning next year, a new law will require all health care providers in Alaska to be more transparent about their prices. Some hope it will give consumers the tools to shop around, boosting competition and subsequently lowering prices. While it may help prevent sticker shock, experts said the move most likely won’t result in cheaper medical procedures. 

Davon Smith is the clinical business operations director for SVT Health and Wellness in the Homer area. He said if health care prices catch patients off guard and they are unable to pay, it can impede their treatment.  

“It actually compiles onto those social determinants that hinder them from actually getting better,” he said.

That’s partly why the clinic discusses prices and payment options with clients.

“We want to make sure you can afford that kind of treatment plan, that kind of health care costs, and it makes it easier for the patient to be informed and be a part of that decision-making," he said. 

A new law will soon require SVT to go one step further. It will require all health care providers to post prices for the top healthcare services they provide, among other requirements.  Patients will still pay different prices depending on their insurance and other factors.

Andrea Ducas is a senior program officer with the Robert Wood Johnson Foundation, and much like Smith, she said the primary reason to provide patients with more price transparency is to prevent sticker shock and help patients factor in the cost of procedures while creating a treatment plan. However, she also said it gives them more tools to shop around.

“When we are able to compare prices or able to see prices, we save money,” she said.  

But she said comparing prices only goes so far.

“So if you had the choice between going to get an x-ray that cost $300 or getting an x-ray that costs $250, if the price of that x-ray really appropriately should only be $20, giving you the option and helping you shop, that’s not going to help bring the costs down to $20,” she said.

Historically, there haven’t been many incentives for patients to shop around as insurance coverage has typically picked up the bulk of healthcare costs. Patients have also relied heavily on their doctors to refer them to other providers.

“Patients have not really gravitated toward this type of information in any kind of meaningful way,” said Dennis Scanlon, a professor of health policy and administration and the director of the Center for Health Care and Policy Research at Penn State.

Scanlon explains that laws requiring transparent healthcare prices in other states and cities, including Anchorage, have not exactly spurred competition.

“If your goal is to create healthcare transparency to either get people to go to the low cost providers or to have the high cost providers lower their prices, there are some selective examples of that happening, but it's not widespread yet,” he said.

But he said markets with high healthcare costs such as Alaska and changes in the healthcare market in general have the potential to change that.  

“As there has been more of a push for insurance plan designs with higher deductibles which require more first-dollar-out-of-pocket expenses by patients,” he said. “So I think that's, for lack of a better term, woken some patients up to understand that ‘boy, this is costly’ and it might be worth shopping around a little bit.”

Proponents of the new law will have to wait and see if Alaskans are more prone to shop around when the healthcare transparency law goes into effect on Jan. 1.

However, shopping around only works if you have a choice in healthcare in the first place, and for many rural and roadless Alaskan communities, that’s just not a reality.

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Renee joined KBBI in 2017 as a general assignment reporter and host. Her work has appeared on such shows as Weekend Edition Saturday, The World, Marketplace and Studio 360. Renee previously interned as a reporter for KPCC in Los Angeles and as a producer for Stateside at Michigan Radio. Her work has earned her numerous press club awards. She holds an M.S. in journalism from the University of Southern California and a B.A. in women's studies from the University of Michigan.
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