Price Comparisons---1AR

1. don’t address administrative complexity or force providers to compete based on costs because the only prices compared are internal to the insurer---preserves the majority of industry inefficiencies

2. price don’t determine decisions, consumers care about quality

3. doesn’t solve admin complexity or bargaining power

That’s olen

Won’t be used AND are ineffective because of complexity and provider market power---more likely prices increase

Erin C. Fuse Brown 15. * Assistant Professor of Law, Georgia State University College of Law. 2015. Resurrecting Health Care Rate Regulation. Google Scholar, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2584625.

Price Transparency Price transparency promotes the notion that health care purchasers, whether individuals or employers, ought to be able to find and compare the price of a given service between hospitals. Price transparency has broad political and intuitive appeal by attempting to lift the veil of secrecy that shrouds hospital prices.91 So the argument goes, consumers need access to accurate, understandable, and comparable information regarding hospital price and quality for market forces to discipline prices and improve quality.92 Armed with such information, consumers will shop for health care and select the lower cost, higher quality providers and pressure the others to bring their prices and quality levels in line.93 Health care price transparency initiatives are being pursued at both the state and federal levels. A majority of states have passed some form of legislation to improve hospital price transparency.94 According to 2014 data from the Catalyst for Payment Reform, thirty-five states only require that hospitals post or make available their chargemaster data;95 fifteen states require the reporting of the prices hospitals receive from private payers, whether actual claims data or average amounts paid (several of which also require reporting of chargemaster data);96 and two states (New Hampshire and Massachusetts) make available more detailed, plan-specific price information.97 At the federal level, the Department of Health and Human Services initiated its price transparency efforts by releasing hospital charge data on May 8, 2013, updated annually, and making available $87 million in grants to states to create data centers to collect and analyze health care pricing information for consumers.98 For transparency efforts, the type of data matters. Publishing chargemaster prices does little to accomplish price transparency.99 Chargemasters are too long and incomprehensible to be useful and do not reflect the prices that the majority of individuals with insurance would pay.100 Average prices negotiated by payers gives a better sense of the relative price differences between hospitals actually paid by health plans in the aggregate, but it does not give an individual a sense of how much she might pay with her particular health plan or the range in prices negotiated by different health plans. Plan-specific data or estimates of a patient’s expected out-of-pocket costs are more helpful for consumers to get a sense of what their actual costs might be, but still may fall short if not accompanied by robust quality data, which is much more difficult to measure.101 Most consumers do not want cheaper health care if it is of poorer quality, and without good quality data, patients often assume (incorrectly) that price is a proxy for quality.102 It is far from clear whether consumers will use available price and quality data information to make their treatment choices. Generally, the more complex the information, the less consumers utilize it. For example, price information ought to be provided about the whole bundle of services associated with an episode of care rather than a disaggregated list of coded, a la carte items, as hospital services are often priced.103 Earlier efforts at health plan price transparency using easy-to-read symbols ($ vs. $$$) were abandoned due to little consumer use and pressure from low-price providers to increase prices.104 If the patient is shielded from price differences because she has exceeded her deductible, then she has little incentive to choose a hospital based on price information. Price transparency, though politically popular, has a couple of major pitfalls. First, disclosure of prices does not solve the market failures created by noncompetitive hospital markets. Despite having among the most robust price transparency laws in the country, New Hampshire has not seen a measurable reduction in hospital prices or price variation.105 There, price transparency has not been able to overcome the tidal force of a noncompetitive hospital market.106 Where hospitals do not compete on price, transparency does little to constrain prices. Large, “must-have” hospitals can still command high prices without losing patient volume where patients and payers have few alternatives. The second pitfall is that widespread price transparency may lead paradoxically to higher rather than lower hospital prices.107 In particular, revelation of the prices that commercial health plans actually pay hospitalsthe data most helpful for patientscould create a perverse incentive for hospitals to raise their prices.108 To illustrate, imagine Hospital A offers a significant discount to Insurer 1 and a smaller discount to Insurer 2. If forced to reveal its prices, Hospital A might be unwilling to offer the deeper discount to Insurer 1, knowing that Insurer 2 will likely pressure it to offer the same discount.109 This tendency is exacerbated where the hospitals have greater bargaining power than the health plans, which is true in most provider markets.110 In these markets, a lower-priced Hospital B may raise its prices once it sees what Hospital A is charging because the health plans lack the power to keep Hospital B’s prices in check.111 Especially in less competitive markets, price transparency might create a magnetic ceiling, where all hospitals converge on higher prices rather than compete to lower them.112 Hence, prices might become more uniform, but uniformly higher. 2. Consumer-Directed Health Care Consumer-directed health care (“CDHC”) is another market-based approach that builds off of price transparency. The typical mechanism to encourage CDHC is through a high deductible health plan coupled with a tax-advantaged health savings account (“HSA”).113 By giving patients some “skin in the game,” CDHC sensitizes patients to health care costs, which leads the patient to exert market pressure on providers to move toward more uniform prices.114 CDHC attempts to address the moral hazard problem of health insurance by forcing the insured individual to bear the initial cost of her health care expenditure, which will cause her to ration her utilization of services.115 In 2015, a plan is considered a high deductible plan if the deductible is at least $1300 for an individual and $2600 for a family.116 Deductibles vary widely, and over a third of family deductibles exceed $5000. 117 The use of high deductible plans is widespread and steadily increasing. In a 2014 survey of large employers, eighty-one percent reported offering a CHDC plan to employees as an option, and thirty-two percent reported offering a CDHC plan as the only option, up from twenty-five percent the previous year.118 As of 2014, twenty percent of covered employees were enrolled in a CDHC plan, compared with just four percent in 2006. 119 On the health insurance exchanges, high deductible health plans comprise approximately sixty percent to eighty percent of plans.120 In the form of high deductible health plans, CDHC has a limited impact on hospital prices because most hospital services will be so expensive that a patient will “blow through” her deductible, and thus be insensitive to price variations above the deductible.121 Carl Schneider and Mark Hall identified several barriers to the goals of CDHC that prevent patients from engaging in consumer behaviors.122 Patients may lack choices among plans and providers.123 Moreover, despite efforts to promote transparency, patients still lack necessary information about price and quality.124 If they lack quality data, patients are likely to opt for the higher-priced hospitals because of the mistaken perception that price is a proxy for quality.125 Even with price information, patients are often unable to bargain with the hospital, either because they will not or cannot. Patients place themselves in their doctor’s hands, following whatever advice the doctor prescribes, including at which hospital to have a procedure performed.126 Acutely sick patients are in a particularly vulnerable position, unable to negotiate on prices for urgently needed care on the way to the emergency room or at the bedside of a gravely ill family member.127 Empirical research has cast doubt on patients’ financial literacy and ability to process the complex information necessary to make health care choices.128 Studies have demonstrated that higher cost-sharing has a disproportionate, negative impact on the poor and those with chronic illness, highlighting questions of distributive justice.129 Greater costsharing causes people to cut back not just on unnecessary care, but needed care as well.130 Privately insured individuals with incomes below 200 percent of poverty are significantly more likely to have deductibles that exceed five percent of their incomes and are more likely to delay needed care as a result.131 When individuals defer cost-saving preventive and outpatient care, they may later consume more expensive ER and hospital services for poorly controlled illness.132 CDHC may contribute to adverse selection, with healthier (and, evidence shows, wealthier and more educated) individuals selecting a CDHC plan and sicker people opting for plans with lower deductibles.133 Meredith Rosenthal and Norman Daniels explain that among employer-sponsored high-deductible health plans with HSAs, the employer contribution to the HSA tends to redistribute wealth from the unhealthy to the healthy.134 3. Reference Pricing Like high deductibles, reference pricing also puts the individual’s own dollars at stake, but reverses who pays the first dollar of coverage.135 Instead of making the patient pay for the first few thousand dollars of care, health plans agree to pay the price for a given service charged by a low priced provider, and the individual is free to seek care from a range of other providers but is responsible for the difference between that provider’s higher price and the reference price.136 Health economist Austin Frakt illustrates the difference between deductibles and reference pricing by analogizing deductibles to being told that insurance will pay for any Toyota you want if you pay the first $500. 137 You would likely pick the most expensive car, such as an $80,000 Land Cruiser. With reference pricing, you are told that insurance will cover the first $15,000 of any Toyota, but you have to pay the excess price.138 In this example, reference pricing will clearly lead to more value and price-sensitive shopping by the consumer who may opt for a Toyota Yaris instead of a Land Cruiser. Proponents say reference pricing makes patients more sensitive to the differences in price between hospitals than CDHC, where most hospital visits will exceed the patient’s deductible.139 The increased price sensitivity from reference pricing creates market pressure for high-priced providers to lower their prices closer to the reference price or else lose business. One advantage of reference pricing over CDHC is that it relies on the health plan to gather and report the providers’ price information rather than the individual, who may not have sufficient data or wherewithal to evaluate the different options.140 Health insurers favor reference pricing because it caps their financial responsibility for a particular service.141 There is early evidence that reference pricing can nudge patients toward more cost-effective choices and cause high-priced providers to lower prices closer to reference price levels.142 Payers are starting to use reference pricing for hospital or outpatient services, but generally only for certain standardized procedures where there is wide price variation but little variation in quality, such as colonoscopy or hip replacement.143 In addition, the service ought to be “shoppable,” that is, a nonurgent service that allows the patient time to shop around, with readily available information regarding price and quality, and for which there are several choices of provider.144 Reference pricing also has limitations. Most health care spending is for services that are not shoppable and are therefore ill-suited for reference pricing.145 To make up profits that it loses on reference-priced services, hospitals may simply raise prices for non-reference priced services.146 One study suggests reference pricing may have a limited impact on total spending because it tends to affect prices only at the highest end of the price distribution.147 Some of the barriers to CDHC, such as lack of choices, lack of available data, reliance on physician recommendations, and impaired ability to make choices based on information given, could similarly afflict reference pricing initiatives. Reference pricing comes with a thorny technical problem of how to set the reference price. Set too high, and the cost-savings will be lost, with lower-priced providers raising their prices up to the reference price.148 Set too low, and the providers may not be able to cover the cost of providing the service, leading providers to drop the service, to cost-shift to more remunerative services, or to seek market power as a method of resisting reference pricing.149 4. Tiering and Narrow Networks Another market approach relies upon health insurance plans to engage in active purchasing in the form of narrow or tiered networks to pressure hospitals and other providers to restrain prices.150 In a narrow network, payers selectively contract with a limited group of providers who will agree to lower prices in exchange for patient volume.151 Under a tiering strategy, the health plan sorts contracted providers or service lines into tiers based on price and steers patients to the lower priced providers (the preferred tier) using lower cost-sharing incentives.152 In their roles curating the narrow or tiered network, the health plan is the one wielding the consumer power on behalf of the patient. Neither approach is new. Narrow networks and tiering were both strategies widespread during the rise of managed care and HMOs in the 1980s and 1990s.153 Consumers and employers vociferously resisted choice-limiting networks then, and it is unclear whether they will accept similarly narrowed choices today.154 Nevertheless, tiering and narrow networks are gaining renewed attention as solutions to discipline health care prices.155 The ACA has accelerated the revival of narrow networks because of its limits on health plans’ ability to engage in underwriting or to narrow benefits to keep premiums down.156 Thus, one of the remaining strategies for health plans to keep their prices in check is to offer narrow networks of providers.157 Narrow networks and tiering strategies rely upon the existence of sufficient competition among hospitals, which is lacking in many markets.158 Without competition, powerful providers use their market power to require anti-tiering provisions in their contracts with health plans, or else require that the plan always include the high-priced hospital in the most preferred tier.159 To address this issue, Massachusetts passed a law in 2010 prohibiting providers from using anti-tiering provisions in their plan contracts.160 Even with such a law, health plans may have no choice but to include high priced hospitals in their network or in the best tier because they have unique services, such as a Level I trauma facility or a Neonatal Intensive Care Unit (“NICU”), that lower priced hospitals lack.161 In most places, health plans will be unable to exclude “musthave” providers from the highest tier due to their market power.162 5. Market Approaches Measured Against Health Care Market Failures Market solutions to the hospital pricing problem are intuitively pleasingthey attempt to restore market forces to a failed market. Price transparency and reference pricing take aim at correcting information asymmetry and helping patients become informed consumers. It may be technically difficult to implement price transparency or reference pricing, but it is plausible that well-designed programs can prompt effective comparison shopping by patients.163 The cost-sharing imposed on individuals by CDHC, especially in the form of reference pricing, attempts to address moral hazard and sensitizes patients to the prices of their care. The biggest problem with market approaches to discipline hospital prices is that they fundamentally will not work in concentrated markets where there is little choice or competition between providers.164 And as discussed above, concentrated hospital markets are the norm, not the exception.165 Where there is no choice, patients cannot shop around or substitute the lower cost or higher value provider. Where hospital-sellers have disproportionate market power, purchasers (health plans or patients) can exert little discipline on prices through transparency, CDHC, reference pricing, or active purchasing. Moreover, the stressful nature of most hospital encounters makes it unlikely for transparency plus CDHC to overcome patients’ substantial cognitive and behavioral barriers to rational consumer behavior.166 Even when equipped with sufficient price and quality information, when it comes to serious medical decisions, patients generally defer to their physicians.167 Buying health care is thus unlike shopping for a car, unless one imagines buying a car while being chased by a gunman, when there are only a couple unfamiliar models to choose from, relying upon the guidance of a trusted car salesman who tells you which car is best for your situation and also serves as your driver as you try to get away. Although market approaches attempt to address information asymmetry and moral hazard, the principal-agent problems persist. Health plans and/or providers are in the best position to gather, report, and translate price and quality information for patients, and thus market approaches build upon the existing web of principal-agent relationships.168 Finally, market solutions like price transparency or reference pricing are inherently limited because much of health care is not “shoppable.”169 Acute or urgent health care does not lend itself to comparison or price shopping, and patients end up seeking care at the nearest hospital, the one to which the ambulance delivers them, or the one to which they are referred to by their physician. Market solutions are premised on improving informational deficits and sensitizing consumers to their health care costs to bring competitive forces to bear on health care prices. As an overall strategy to discipline health care prices, however, market solutions are fundamentally limited because they fail to address the underlying lack of competition in hospital markets and barriers to patient consumer behavior.17

No incentive to comparison shop and it’s too complex

Amanda Frost 17, Dr. Frost is a senior researcher at the Health Care Cost Institute., 4-11-2017, "Can Consumers Be Smart Health-Care Shoppers?," WSJ, https://www.wsj.com/articles/can-consumers-be-smart-health-care-shoppers-1491962640

Advocates for price transparency would have us believe that we, as “consumers,” should consider our health care a product to be shopped for, like a pair of shoes. But mainly we are “patients,” with varied, often time-sensitive health-care needs. There is an important distinction between presenting the information—and choices—to patients and asking consumers to make complicated decisions about their health care based on that information. The health-care system is complex: Less than 15% of Americans can correctly answer questions about basic components of traditional health insurance. Choosing health-care services and providers may be even more complicated, especially for the half of all American adults that have at least one chronic condition. More important, the public seems to not want to shop for health care. In studies, fewer than 5% of respondents used health-care shopping tools when available. This lack of use has persisted over time, even as tools have improved. When it comes to their health care, people generally don't want more choices; rather, they want to know that they are getting good care and to feel confident in their range of choices. Most Americans prefer to choose their providers based on recommendations from their friends or their family, rather than on price. People also lack a sufficient incentive to engage in price shopping. A single, well-informed and motivated consumer who needs an expensive elective procedure may be able to spend time researching and save money by shopping for the lowest price possible, but this scenario is the exception rather than the norm. Available evidence is not cause for optimism about how much money can be saved with more choices and publicly available prices. While large health-care payers may save some money from consumer shopping, the average person will likely see little, if any, savings. And what savings are possible will largely be determined by insurance-benefit design. No consumers could shop their way to a lower copayment, or out of making a deductible payment. Factor in the associated opportunity costs, and the average American won't save money. Finally, many Americans don't live in places with lots of providers and health-care choices. Transparency efforts centered on consumer shopping rest on the assumption that people have multiple options to choose from. Some say people can avoid complexity entirely and take simple steps to save a lot of money—such as asking a doctor for generic drugs and paying cash for procedures, which can carry a lower price. But health-care prices are much more complex than those scenarios make them appear. Prices vary by procedure, provider, facility and negotiated insurance rate. As for asking a doctor how to save on costs, we cannot expect doctors to be experts on everything. No health-care provider could memorize the price of every service or drug, nor do most have access to a tool that provides this information. For most patients, their insurance determines their costs, and providers don't generally have access to all of the necessary information about a patient’s insurance to give the advice people need about costs. Even the seemingly simple switch from a brand prescription to a generic version might be complex. Some drugs don't have generic versions, some generics are as expensive as the brand versions, and some may not be covered—or be well-covered—by a specific insurance plan. The estimated price and quality of a health-care service or provider should be available to anyone who wants it. But we should not expect people to make complex decisions about their health care using those abstract measures. Smart shopping might work for some people. But for the vast majority of consumers, it isn’t even a choice.

Culture of overspending can’t be fixed by data

Jeff Eisenberg 17, EVR Advertising, 2-20-2017, "Does Cost Matter to Healthcare Consumers?," http://www.evradvertising.com/healthcare-marketing/engaging-consumer-research-do-price-transparency-tools-work/

It Starts with Perception Even though there is no evidence that higher prices translate into higher quality, many consumers still believe this to be true. In a survey published by Health Affairs, a journal of health policy research, most of the people who had compared pricing believed price and quality were associated. Thus, the challenge for healthcare providers is to train consumers to understand pricing and how it relates to quality, and to educate them on how best to compare the medical services being offered. Price transparency was designed to give consumers more control of their spending and, by extension, lower overall healthcare spending. The Harvard Medical School study revealed a need for healthcare providers to find better ways to engage consumers to research medical costs. “We’re trying to change a culture here,” said Barbara Anthony, a senior fellow in healthcare at the Pioneer Institute, a non-profit think tank, in an article by the Boston Globe . “You don’t do that by saying, ‘Here’s a site, go use it.’” According to Anthony, insurers need to “double down their efforts to motivate consumers to choose high-value, low-priced services.”