What Happens When Price Transparency Meets Childbirth?
By Jamie Daw, PhD
August 27, 2021
Jamie Daw is an assistant professor in the Department of Health Policy and Management at the Columbia University Mailman School of Public Health. Her research focuses on the effects of policies on access to care and health outcomes for pregnant people.
Price transparency tools that allow patients to compare prices and “shop” for health care have been strongly encouraged by recent federal and state policies. The promise of price transparency is that it will engage consumers to select lower cost options and reduce health care spending. Childbirth is an ideal application of these tools: It’s common (childbirth is the leading cause of hospitalization in the U.S.), predictable (you have at least 9 months to plan), expensive (average out-of-pocket costs for birth were $4,569 for commercially insured patients in 2015), and priced unevenly (prices vary widely across regions and facilities). But do patients actually use these tools to shop for a hospital to give birth at?
In a new study published in JAMA Network Open last week, a team of researchers led by Rebecca Gourevitch examined this exact question. Using data from a national health insurer, they found that 13% of pregnant patients used a web-based price transparency tool to search for childbirth prices in 2015 and 2016. Patients with insurance plans that required them to pay a greater share of the costs of care through coinsurance were more likely to use the tool, but still only 15% of those with the highest coinsurance levels did so. In other words, only a small number of patients actually used this tool, even for the ideal shoppable service of childbirth and among those with the most to theoretically gain.
For those that did price shop, did it impact which hospital they picked or how much they spent? The study didn’t look to answer those questions directly, but they did find that the majority of patients (56%) didn’t search for childbirth prices until the second or third trimester. This was likely after they started prenatal care with their obstetric provider —which may have indirectly selected the birthing hospital where their clinician has admitting privileges — before having a chance to take price information into account. The authors suggest these “late searchers” may have been using the tool to plan financially for birth as opposed to comparing prices. They also found that users of the tool spent more out-of-pocket, not less, compared to those who didn’t use the tool. While this isn’t a causal link, it does align with other recent research showing that use of these tools doesn’t guarantee use of lower price providers.
While this study only looked at one price transparency tool and one health service, its findings raise an important dilemma for policymakers who laud the potential impact of these tools on decreasing overall health care spending. While Americans express strong support for broader availability of health care price information, price is only one input into care decisions, and it may be secondary to other factors like reputation, relationship with a specific clinician, or even distance to the provider (an especially important factor for childbirth). Notably, these tools are not designed to provide information on value or the relative tradeoff of price and quality, which may be the information consumers actually want to make care decisions. But even if they included that information, this study’s findings underscore a key question: How many people are actually able and interested in shopping for health care like they do a car or a new TV?