Would Greater Transparency And Uniformity Of Health Care Prices Benefit Poor Patients?

Abstract

President Bush, the World Health Organization, and leading scholars have called for greater price transparency in health care. Prices are transparent when the buyer knows his or her price or knows prices paid by others, in advance. Transparent prices inform consumers of expected costs and reveal when sellers are charging high prices to poor people. Under some conditions, however, price transparency can increase prices paid by the poor, deter business entry in poor markets, reduce competition, lower investment, and mislead if inaccurately measured by a third party. We recommend alternative approaches to lowering prices for the poor and increasing efficiency.