Tom Coburn: Here's why price transparency can revolutionize health care

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Fox Business

Democratic presidential primary candidates are spending a lot of time talking about health care but no time talking about the primary driver of runaway costs – the lack of price transparency.

Price transparency is the right to know what things cost before you buy. Consumers demand price transparency in every other area of the economy.

Imagine, for instance, if the prices for products on Amazon suddenly disappeared. Consumers would be apoplectic. But in health care opacity is the norm. The Trump administration wants to change that.

In June, President Trump issued an executive order requiring hospitals to post actual prices. The president said, “To make fully informed decisions about their health care, patients must know the price and quality of a good or service in advance.”Only in health care is this radical. Making price discovery a norm in health care could be a game-changer and help reduce the $765 billion our country wastes every year through inefficiency.

Even progressives acknowledge America’s third-party payment model, which separates patients from the purchase of health care, doesn’t make sense. As economist Jonathan Gruber, a key architect of ObamaCare, says, “[T]here really isn't a single health care expert who would design a system from scratch which would include this feature.”

The feature Gruber was describing was an accident of history. During WWII, the War Labor Board essentially allowed employers to increase pay to avoid wage controls by offering tax-free health benefits, thus creating employer-sponsored insurance (ESI).

While ESI isn’t the problem per se (employers would have good reasons to offer coverage without a tax benefit) this feature created a third-party payment system. We now have 75-year era of opacity that has turned basic price discovery into a tedious research project for consumers.