Unlike most markets for consumer services in the United States, the health care market generally lacks transparent market-based pricing. Patients are typically not able to comparison shop for medical services based on price, as medical service providers do not typically disclose prices prior to service.(1) Government mandated critical care and government insurance programs like Medicare also impact market pricing of US health care.
Since the majority (85%) of Americans have health insurance, they do not directly pay for medical services.(4) Insurance companies, as payors, negotiate health care pricing with providers on behalf of the insured. Hospitals, doctors, and other medical providers have traditionally disclosed their fee schedules only to insurance companies and other institutional payors, and not to individual patients.
Uninsured individuals are expected to pay directly for services, but since they lack access to pricing information, price-based competition may be reduced. The introduction of high-deductible insurance has increased demand for pricing information among consumers. Recently, some insurance companies have announced their intention to begin disclosing provider pricing as a way to encourage cost reduction.(5) Consumer websites like MDCost.com have also emerged which provide benchmark prices for medical procedures and services.(6)
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