Health care spending in Oregon averages more than $8,000 annually per person, and increased 60 percent from 2004 to 2014 (before adjusting for inflation). Much of this spending occurs without patients or providers knowing the price of care in advance.
Opaque and unavailable prices for health care services violate the basic consumer right to know in advance about the price of goods or services. When consumers are asked to make decisions about care without access to meaningful price information, they are unable to make informed decisions in high-stakes situations that can profoundly affect their future health and financial security.
Improving the price transparency of health care services isn’t just about fulfilling a basic consumer right – it is also a critical step in diagnosing and addressing the high cost of health care. Combined with the right incentives, improved price transparency could shift the behavior of providers, consumers and insurers, enabling the nation to save $100 billion over 10 years, according to one estimate. Though that’s a modest one-quarter of one percent of total health care spending, it still represents significant savings; for Oregon that would have reduced health care spending by $80 million in 2014.
Oregon policymakers, hospitals and health care providers have made modest improvements in price transparency in recent years. However, Oregon should pursue additional measures to improve the visibility of prices for patients, providers and health plans.
Greater price transparency has the potential to play a role in controlling health care costs by influencing the behavior of patients and providers.
Price transparency is also important for health care providers and insurers. Providers influence or directly make a large share of health care decisions and spending, often without knowing in advance the price other providers, such as labs, charge customers and insurers. Insurers can use increased transparency to influence how much providers choose to charge for their services.
If poorly implemented, however, price transparency has the potential to increase rather than decrease health care prices and spending. This risk can be mitigated by how price data is presented or released.
Oregon must do more to improve price transparency for consumers.
Policymakers could also pursue options to improve price transparency for providers. For example, Oregon should explore requiring hospitals to include an estimated price for laboratory and imaging tests in electronic health record systems so that providers can see that information when ordering.
Oregon should pursue measures to ensure that greater price transparency does not have the undesirable consequence of increasing prices. To start, the state should ban “most-favored nation” agreements between providers and health insurers, in which a provider, after negotiating a price with an insurer, agrees not to offer any competing insurer a lower price. Most-favored nation agreements can inflate health care prices even with current, limited price transparency, and should be banned.
 Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, National Health Expenditure Data: Health Expenditures by State of Residence, June 2017, available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsStateHealthAccountsResidence.html.
 Chapin White et al., West Health Policy Center, Healthcare Price Transparency: Policy Approaches and Estimated Impacts on Spending, May 2014, available at http://8637-presscdn-0-19.pagely.netdna-cdn.com/wp-content/uploads/2017/07/Price-Transparency-Policy-Analysis-FINAL-5-2-14.pdf.
 Assumes one-quarter of one percent is annual average savings. Oregon spent $31.9 billion on health care in 2014: See note 1.
 Anna Sinaiko and Meredith Rosenthal, “Examining a Health Care Price Transparency Tool: Who Uses It and How They Shop for Care,” Health Affairs, (35(4):662-670, doi: 10.1377/hlthaff.2015.0746, April 2016.
 Christopher Whaley et al., “Association between Availability of Health Service Prices and Payments for These Services,” JAMA, 312(16):1670-1676, doi: 10/1001/jama.2014.13373, 22/29 October 2014.
 Sze-jung Wu et al., “Price Transparency for MRIs Increased Use of Less Costly Providers and Triggered Provider Competition,” Health Affairs, 33(8):1391-1398, doi: 10.1377/hlthaff.2014.0168, 2014.
 Leonard Feldman et al., “Impact of Providing Fee Data on Laboratory Test Ordering: A Controlled Clinical Trial,” JAMA Internal Medicine, 173(10):903-098, doi:10.1001/jamainternmed.2013.232, 2013.
 Ha Tu and Rebecca Gourevitch, California HealthCare Foundation and Robert Wood Johnson Foundation, Moving Markets: Lessons from New Hampshire’s Health Care Price Transparency Experiment, April 2014, available at http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/PDF%20M/PDF%20MovingMarketsNewHampshire.pdf.
 Kathryn A. Phillips, David Schleifer and Carolin Hagelskamp, “Most Americans Do Not Believe that There Is an Association between Health Care Prices and Quality of Care,” Health Affairs, 35(4):647-653, doi: 10.1377/hlthaff.2015.1334, April 2016.
 Judith H. Hibbard et al., “An Experiment Shows that a Well-Designed Report on Costs and Quality Can Help Consumers Choose High-Value Health Care,” Health Affairs, 31(3):560-568, doi: 10.1377/hlthaff.2011.1168, March 2012.
 Marina Lao, Director, Office of Policy Planning; Deborah L. Feinstein, Director, Bureau of Competition; and Francine Lafontaine, Director, Bureau of Economics, Federal Trade Commission, Letter to The Honorable Joe Hoppe and The Honorable Melissa Hortman, Minnesota House of Representatives, Re: Amendments to the Minnesota Government Data Practices Act Regarding Health Care Contract Data, 29 June 2015, available at https://www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-comment-regarding-amendments-minnesota-government-data-practices-act-regarding-health-care/150702minnhealthcare.pdf.