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Letter to the Editor

May 18, 2012

Dear Editor,

The April/May issue of Quality Matters includes two articles on price transparency, which is presented as a desirable objective although difficult to achieve because of various obstacles, mainly technical. Missing in the articles is acknowledgement that transparency might actually be undesirable. To be more precise, if transparency is to be effective in controlling costs, it would need to be coupled with other payment changes that would be (and are) undesirable.

For people whose health care is insured, the prices of various items of health care are matters of curiosity only. Even if they pay the insurance bill, they do not pay the medical bills. Their interest lies in the effectiveness, safety, and service aspects of care. (For a few public-minded people, the price is important even though someone else is paying. They are unusual.)

But this is precisely the problem—so say the marketplace enthusiasts. They advocate "skin in the game" for patients. In other words, they advocate raising deductibles and co-payments substantially so that patients will behave like real consumers. Then price transparency, coupled with increased costs for patients, will lead to greater value in health care—maybe.

Small cost differences can sometimes be effective in changing behavior without causing any important increase in patients' costs. For example, a $1 co-payment difference can decrease the use of a brand name drug in favor of the identical generic drug. However, as stated by M. de Brantes in his interview, the differences generally required to change behavior are much higher, on the order of $300 to $400 or more.

Behavior change can be achieved by increasing patients' costs substantially, as has been known ever since the RAND Health Insurance Experiment of 40 years ago. The wasteful use of health care decreases, but so does the use of preventive care and care for chronic disease. Moreover, the increased costs are, of course, more easily borne by those with higher incomes, resulting in rationing by ability to pay, another undesirable effect.

Making prices transparent for patients is a bootless exercise unless it is joined with substantial increases in out-of-pocket costs for patients. These increases can be achieved by partially rolling back the coverage provided by health insurance. Is this good social policy? It is harmful to health and unfair to those who have fewer dollars to use. We have better means for controlling costs and increasing value.

Gordon Mosser, MD, MLitt
School of Public Health and Medical School
University of Minnesota

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