Can Transparency Tools Further the ACA’s Goals of Reducing Costs?

Shortly after the Affordable Care Act was signed into law, President Obama touted its ability to “cut costs and make coverage more affordable for families and small businesses.”

In its efforts to reduce costs and the number of uninsured U.S. residents, the law also has spurred an increase in demand for health care price and quality information, as consumers shoulder a larger share of health care costs, particularly through the rise in popularity of high-deductible health plans.

For example, the latest data from America’s Health Insurance Plans show nearly 17.4 million people were enrolled in a health savings account/high-deductible health plan in January 2014, up from 11.4 million in January 2011. Such plans require consumers to pay for care until reaching the deductible amount — $1,300 or more for individuals and $2,600 or more for families, according to IRS.

The ACA and Price Transparency

While health care price transparency was not a primary goal of the ACA, the law did include several provisions aimed at increasing consumers’ access to health information.

For example, the ACA required insurers selling health plans through the health insurance exchanges to create websites or other communication tools that allow consumers to view their expected out-of-pocket costs for specific services. The law also required insurers to provide a uniform summary of coverage for enrollees and applicants.

In addition to coverage disclosure requirements, the ACA required hospitals to make public an annual list of their standard charges for items or services. Under a final rule, hospitals also can satisfy the ACA requirement by making public their policies for allowing individuals to view their lists of charges.

Stuart Gutterman, vice president of the Commonwealth Fund’s Medicare and cost control program, said that health care transparency is an ongoing process and effort. He said, “What the ACA did among other things was try to set up a process where more information is out there.” He added, “The more information that is out there, the closer we get to making better decisions on both sides — patients and doctors.”

Cost Concerns Linger

Despite the ACA’s transparency-related provisions, a recent Harris Poll found that 38% of insured consumers reported a poor understanding of the health care services covered under their plans. In addition, 41% did not know what their prescription drugs would cost and 61% did not know what they would pay out-of-pocket for urgent care or walk-in clinic visits.

Further, recent polling suggests that for some consumers, health care costs remain a top financial concern and have resulted in delayed care.

For example, a Commonwealth Fund survey found that 36% of U.S. residents reported facing financial difficulty for paying for medical care. Nearly a quarter of respondents said they did not see a health care professional for a medical problem within the past year. The percentage of respondents who delayed needed medical care increased to one-third among those who had incomes below 200% of the federal poverty level.

Meanwhile, a Consumer Financial Protection Bureau report found that nearly 43 million U.S. residents have outstanding medical debt. The report authors suggested that one reason for medical debt is confusing billing notifications from insurers and hospitals that often make it difficult for consumers to discern how much is owed, the payment deadlines and which organization to pay.

The Potential for Health Care Transparency Tools

Research shows that health care transparency tools can be an effective way to help consumers better understand their care and further the ACA’s goal of reducing costs.

For example, a UnitedHealthcare study found that members who used the insurer’s online tool to estimate health care costs were more likely to choose a high-quality provider than those who did not use the tool.

In addition to improving the quality of provider selected, research shows that online transparency tools can reduce out-of-pocket costs for consumers and give insurers more leverage to negotiate better prices for health care services.

Now that the wheels are in motion, Stuart noted that the federal government and private sector can work to take the information that is out there and format it in a way that is useful to consumers and providers when they need it most. And new transparency tools are consistently being developed as patient demand for such information increases.

For example, Clear Health Costs is an online tool that allows patients to search for prices of up to 35 common procedures in a given area.

Meanwhile, software platform developer MicroStrategy in 2014 launched an app that allows consumers to compare quality data for more than 880,000 health care providers and 4,000 hospitals based on geographic location and type of procedure.

In addition, several large health insurers have partnered with the Health Care Cost Institute to launch Guroo, an online portal that allows consumers to view the average price of specific procedures nationally and locally. The groups currently are working to expand the database to include health care quality data.

Health Care Transparency Not a Slam Dunk

While health care transparency tools hold promise, Stuart warned that it is vital to ensure that such information is accurate, consistent and presented in a way that does not overwhelm consumers.

For example, he cited recent findings that showed different hospital rating systems vary widely and said it is important for consumers that such inconsistencies are addressed. He also noted that it is important for consumers to have access to both quality and cost data to make more informed decisions. But overall, Stuart cautioned that there is not just one answer to addressing health care costs.

During a Senate Committee on Finance hearing, held in response to a 2013 article published in Time by journalist Steven Brill, experts urged lawmakers to look beyond health care transparency and the ACA to control costs.

During the hearing, Brill said, “Transparency can only go so far” in addressing the real cost problems, noting that even when provided with pricing data, most patients are unable to do anything to avoid the high costs. Brill added, “While transparency starts the conversation about prices … it’s only a start.”

Around the nation

Exchange competition: Modern Healthcare reports that private health insurance exchange eHealth’s business model has taken a hit since the launch of the Affordable Care Act’s health exchanges.

Preventive measures: In an interview with the Washington Post, U.S. Surgeon General Vivek Murphy outlines his goal to achieve a “prevention-based society” in which all institutions recognize and embrace their role in improving health.

Request denied: Last week, five Republicans on the Senate’s Small Business Committee joined their democratic colleagues to reject a request by Committee Chair David Vitter (R-La.) to subpoena documents from the Washington, D.C., health insurance exchange regarding the enrollment of members of Congress and their staff, The Hill reports. 

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