Price transparency is often touted as a vital component of a high functioning healthcare system—and with good reason. Price transparency is instrumental to keeping consumers safe in the healthcare marketplace by allowing them to judge affordability and plan for the expense of needed healthcare services. It also enables state policymakers to address unwarranted price variation and, in some cases, can incentivize high cost providers to lower their prices to align more closely with industry rates.
Despite its merits, price transparency is also inappropriately credited for its ability to make markets more efficient. Most notably, consumer-facing price transparency tools have generally not been successful when it comes to incentivizing consumers to compare services and shop for the best price.
Increasing the effectiveness of price transparency will require a nuanced understanding of its strengths and limitations with respect to each audience using the information: patients, policymakers, regulators and providers. This Hub Research Brief discusses the opportunities and limitations of price transparency and explores its uses by stakeholder group.