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Price transparency is a situation whereby consumers of goods or services, before making any decisions on a transaction have a prior knowledge of the prices. Most patients have no prior knowledge of the cost they are expected to meet or what other people pay for similar services. Lack of informed prices on medical care is more disadvantageous to the uninsured. The hospitals in the United States charge the uninsured patients more than the amount they receive in form of reimbursements from the private insurers and Medicare. If the price were open then such uninsured patients who usually have lower incomes would be in a position to identify those hospitals that charge lower costs and thereby they can avoid this price discrimination. This would operate in the same manner of operation that the other commodities with price tags operate. This would also not be the case when a patient is operating blindly and only comes to know of the prices after the services have already been provided and ends up paying higher prices. With prior knowledge the patients would be able to go for the affordable hospitals which even though may not provide other complementary services like catering will be able to treat a patient. The patient who doesn’t have this prior knowledge may end up in the non affordable places which are only expensive because of the complementary services yet they give the same treatment. With price transparency the patient is able to save time and energy as well.
Few patients are aware of the cost of the medical care since the third party insurance programs pay and they don’t see the need to ask for the prices. But in the same manner open disclosure of prices of other commodities like gasoline and food leads to competition which causes the prices to come down, medical prices need to be open too so that the price mechanism can function and the patients can benefit from it. This benefits even the insured patients who are responsible for large portions of their medical care expenses which are deducted in the health plans. In this case every hospital will tend to cut its prices to be lower that of other hospitals so as to attract more customers to its services. In turn, the reduction of prices by one hospital then leads to the other hospitals to cut their prices so as to compete effectively. A common thing with open prices even with other commodities is the improved quality that comes with competition. When prices are open and they are higher than the other prevailing prices the provider of such services ensures the higher priced services usually have improved the quality so as to justify the higher price that is charged. This is not usually the case when the prices are not in the open. Poorer services in such cases may be charged higher than the quality services because no competition is in place and the prices of all the other quality providers are shrouded in mystery. If the competition in the medical market becomes stiffer then even quality services could be offered at lower prices. This would be a way that the service provider initiates to bring more and more consumer by making the offer of quality and improved services at the prevailing market price which the other similar but less quality services are being offered. With medical procedures this seem impossible but it could be achieved just it has been achieved by tagging the price of other commodities whose quality improve every now and then. Quality medical procedures ensure that the patients save on their time and money since they are able to receive the technologically improved service whose effects are usually speedier.
The other thing is that with informed decisions the patient can ensure that the price is within the legislation limits. There are legislations in place that limit the amount the hospital can charge a poor, uninsured patient and prior information helps the patient to benefit from such legislations. When the prices are not known to the patient, they may not be able to compare them with what the legislations have provided for and thus they may not be able to ascertain that the requirements of the legislations have been met.
