We Need Greater Transparency to Improve the U.S. Healthcare System
By Robert Popovian and Wayne Winegarden
The time has come for us to think about incremental, evolutionary, and targeted changes to the healthcare system to reduce costs rather than focusing on grand bargains. It is time for practical solutions that will likely have broad consensus amongst patients, providers, employers, and policymakers.
While the debate over the merits of private sector healthcare solutions versus government control of healthcare continues, a group of policy experts with support from the Arnold Ventures and Tobin Center for Economic Policy has proposed an important set of policy solutions through the 1 Percent Steps for Healthcare Reform.
Individually, none of the policy solutions are dramatic, and many have been debated for years, if not decades. However, these solutions demonstrate how implementing a set of ideas that make small changes to the healthcare system can, en masse, create a significant ripple effect that remedies the ever-increasing healthcare cost dilemma in the U.S.
One reform that will enhance the effectiveness of all of the proposed solutions across the healthcare ecosystem is transparency. Without this fundamental principle, none of the proposals can reach their full potential, thus, raising the question of whether the most vital healthcare reform is transparency.
Opposition to transparency is a bane to meaningful healthcare financing reform.
It is well known that lack of transparency in healthcare has led to massive and inappropriate profiteering by all kinds of healthcare actors, to the detriment of the true payors: patients, employers, and the government.
Without a transparent health system, patients can be harmed when they decide to enroll in insurance plans that contain large deductibles or co-insurance payments or insurance plans that institute policies like accumulators which keep them in a perpetual deductible phase. Such harm is befallen upon patients because they don’t know and can’t estimate in advance their out-of-pocket costs due to lack of transparency.
Transparency is also essential to ensure the intended outcomes of certain business practices meet the goals of the policy. For instance, what is the purpose of offering patients copay assistance for brand-name pharmaceuticals that have multi-source generic equivalents available in the marketplace? In a transparent marketplace, patients would understand when copay assistance programs help them, and when purchasing the generic is the better option.
Similarly, transparency will make it easier for patients to discern when they should use their insurance card at the pharmacy counter instead of paying cash for their prescription drugs. There is evidence that at certain times patients pay more out-of-pocket for their medicines by using their insurance instead of paying in cash.
Transparency is often incorrectly defined as a means to undermine a competitive economic market, but it is actually a tool that introduces consumerism into an environment that sorely needs it.
Let’s Promote Transparency
Federal policymakers should continue implementing the regulations already introduced that will help foster a more transparent marketplace in healthcare. For example, the mandate on hospitals to provide clear, accessible pricing information online about the items and services they provide is a tool desperately needed for patients seeking elective procedures or treatments and are responsible for deductibles or co-insurance payments.
In addition, states should continue introducing legislation mandating transparency and accountability on the pharmacy benefit managers (PBM) and insurers. For example, two legislations that passed in Georgia in 2020, House Bill 946 and House Bill 323 (also known as the Pharmacy Anti-Steering and Transparency Act), create transparency for prescription drug prices and prohibit PBM from profiting off prescriptions “steered” to their PBM and insurance affiliates.
It is time for our country to move forward with actionable policies that will help reduce healthcare costs. The ideal most often synonymous with the success of such policies is the principle of transparency.