Unbiased Analysis of Today's Healthcare Issues

Are Health Care Prices Becoming More Transparent?

Written By: Jason Shafrin - Nov• 16•11

Health economists have always said that one of the main problems with health care is that no one knows the price of any services.  Thus, individuals have less of an incentive to shop for high value care. [Other experts claim that prices don’t matter as much because demand for healthcare is inelastic.]

One step towards price transparency is the site Healthcare Blue Book.  Consumer Reports has recommended using Healthcare Blue Book to estimate cost for a variety of diseases such as ADHD.  The magazine has even recommended using Healthcare Blue Book to negotiate rates when a patient does not have insurance coverage.

When I asked Healthcare Blue Book representatives about the source of their data, this was their response: “The data is the average price that an insurance pays its provider for that service in your marketplace adjusted for additional information, market knowledge and a few other factors…The data comes from data warehouses which are storage centers that have claims and billing information.

Healthcare Blue Book provides their information for free.  How do they plan to make money?  Again, from Healthcare Blue Book’s media representative: “Our business growth is in creation of customized Blue Book databases for companies and other organizations. The Blue Book team will look across an organization’s health plans and what different providers are charging for the same service. The variations in price within the same health plan, for the same service, can be enormous because all the rates are negotiated with individual providers.

Sunlight may be the best disinfectant; transparent prices may be a cure for what ails the healthcare industry.

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  1. […] did, the likely result would be confusion, not clarity. A sympathetic post by Jason Shafrin on his Healthcare Economist blog recommends uninsured consumers use the Healthcare Blue Book, which compiles a composite price for […]

  2. Amy says:

    So very true. Amazing what transparency can exist when medical costs are analyzed appropriately.

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