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Why Transparency on Medical Prices Could Actually Make Them Go Higher | The New York Times

It makes intuitive sense — publish prices negotiated within the health care industry, and consumers will benefit. That’s the argument behind the executive order issued Monday by President Donald Trump that is intended to give patients more information about what health care will cost before they get it.

But the peculiarities of the United States health care system, with its longstanding secrecy around negotiated health care prices, mean there is very little research on the possible effects of the particular thing the Trump administration wants to do.

That means that scholars examining the question have had to reach far beyond the health care industry, and even beyond the United States, for answers about what might happen. Their favorite studies come from markets like Chilean gasoline, Israeli supermarkets and Danish ready-mix concrete.

The scholarship suggests that more transparency in health care could backfire, causing prices to rise instead of fall.

The Danish study, in particular, comes up a lot.

“I don’t know if you have had the misfortune of having health economists tell you about Danish cement,” said Amanda Starc, an associate professor of strategy at the Kellogg School of Management at Northwestern, one of several scholars who mentioned a paper with a punny name: “Government-Assisted Oligopoly Coordination? A Concrete Case.”

“Everybody loves the Danish concrete example!” said Matthew Grennan, an assistant professor of health care management at Wharton, who has studied the effects of price transparency on hospital purchases.

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Why Transparency on Medical Prices Could Actually Make Them Go Higher – The New York Times.

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