Price transparency mandate proves market inelasticity

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June 13, 2022

Written by: admin_1

Economics 101 professors in colleges across the U.S. use health care as the premiere example of an inelastic economy — where the consumer is insensitive to price. While most will concede that much of that might be due to a lack of insight and tools, others recognize consumer behavior as the chief culprit. In health care, the lowest cost isn’t the primary driver for consumers.

Even among “shoppable services” where patients perceive little variation in the kind of service received (otherwise considered commodity services), decisions are driven by a whether the patient’s insurance can be applied.

In a recent episode of Freakonomics M.D., part of the family of programs in the orbit of the highly-acclaimed Freakonomics book(s) and podcast, several studies highlight the ineffectiveness of price transparency mandates placed on hospitals.

It begs the question: Why?

More so: Why would the federal government require a “machine readable file”?

  • What would motivate governments publish sets of complicated MS Excel spreadsheets so they could be quickly read by big insurance computers managed by fiduciaries to be crunched, and compiled — but not conveniently by consumers?

To learn more about price transparency and the regulations around new requirements, sign up for the upcoming event hosted by ACHE Central Texas Chapter. Learn more here >>


Some hospitals have decided to postpone publication of their machine-readable files online as they finalize contract disputes with insurers. While the government and select groups advocate for more access to complex and confusing files with little to no consumer usefulness, the Centers for Medicare & Medicaid Services are still moving forward with the mandate. See how one hospital system rejected mandated disclosure of privately negotiated rates. See the story here>

Be sure to visit our events page for upcoming programs outlining price transparency requirements.

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