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Health cost witness: Transparency could backfire

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Most witnesses and lawmakers at a Senate Finance Committee hearing on health care cost transparency argued that consumers need much more detailed price data.

But one witness — Paul Ginsburg, president of the Center for Studying Health System Change (HSC) — said poorly designed transparency programs could end up increasing prices.

The committee organized the hearing, which aired live on the Web, partly in response to an article about dramatic, facility-to-facility variations in health care prices that Steven Brill published in Time magazine.

Especially when it comes to the full “charge master” rates that hospitals try to charge patients who are paying for their own care out of pocket, “this is not a functioning marketplace,” Brill testified. “It’s a casino where the hospital holds all the cards.”

Patients involved in emergencies have no choice about where to go for care, and other patients rarely have the ability to get much information about what care will really cost, Brill said.

Dr. Giovanni Colella, a medical doctor and the co-founder of the Castlight Health care cost information firm, said he started the firm partly because he had a hard time figuring out what the cost and quality of his own mother’s care might be, even though he was a doctor.

But Ginsburg said in written testimony that antitrust regulators fear that, in markets that are highly concentrated and don’t function well, providers will use price databases more to increase prices to the levels that their competitors charge than to lower prices to attract more business.

“The data releases alone will not reduce price variation,” Ginsburg argued.

Instead of publishing the raw prices, regulators would be better off encouraging health plans to create tiers of providers, to steer patients to providers who give the most value per dollar spent, Ginsburg said.

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