Opinion: Daily Journal

The Benefits of Health Care Price Transparency

It’s now been a little more than one month since Blue Cross and Blue Shield of North Carolina went public with its health care cost estimator tool. Regardless of whether you have a BCBS card, anyone can now compare average costs for more than 1,200 procedures in just about any ZIP code across the state.

According to the Charlotte Observer, it’s attracted 8,000 unique visitors and counting along with some national attention.

As noted on the website, there are a few disclaimers to mention. Prices may vary depending on location, complexity of the procedure, patient health status, or whether the cost of anesthesia, drugs, and medical supplies are built into the bundled charges.

And of course, price alone isn’t necessarily the deciding factor when getting an X-ray or going under the knife. Quality metrics and physician credentials need to be considered, too.

But it’s pretty clear that patients can access outpatient medical care at a fraction of the cost in standalone settings compared to larger nonprofit health systems that pass on hefty facility fees or artificially raise prices to cross-subsidize the losses accrued from indigent care.

The chart below compares average charges for a few treatments in the greater Raleigh area:

Price transparency is a beautiful thing, because it encourages healthier competition among providers and insurance companies. In addition, a greater number of patients are demanding to see upfront costs now that employers are pushing more health benefit responsibilities onto employees or dumping them onto the federal health law’s exchanges.

State legislators should take advantage of this tool to push for certificate-of-need reform this legislative session. This will allow for the establishment of physician-led ambulatory surgery centers and physician offices to offer more diagnostic services without the need for state permission.

Over 70 percent of the 635,000 annual surgeries in North Carolina are performed in outpatient settings, and 70 percent of these surgeries are conducted in the highest-cost hospital systems. Meanwhile, North Carolina is the only state in the nation that requires physician offices to gain a CON for providing diagnostic services over a monetary threshold of $500,000.

The fact that the state’s Division of Health Service Regulation suppresses a freer health care sector ultimately denies patients choice and lower health care costs. The chart says it all.

Katherine Restrepo is Health and Human Services Policy Analyst for the John Locke Foundation.