Saturday, December 04, 2004

Why not require the display of pricing?

A major reason why health care prices outpace general inflation critics charge is that consumers are ignorant of medical care's real costs. If consumers knew how much medical care costs they would demand better value. There may be a way to do this without excessive complexity.

Although this proposal may work for some medical products and procedures, it seem optimal for prescription drugs, among the fastest growing costs in health care. In advertisements, issue a regulation that requires the advertiser to explicitly say what the either average cost is or the retail price of the product. That way when for example consumers are reading a magazine advertisement for one particular drug to treat high blood pressure he can compare the price of the product to competing product. This forces the advertiser to also compete on price even though the consumer of the product may not be the purchaser of the product (the insurer).