Is health care price transparency possible without price uniformity?

The Times has an article today about fledgling efforts to introduce price transparency into U.S. health care:

But there has been no easy way for consumers to shop for the best deal on a colonoscopy or blood test. A start-up financed by prominent venture capitalists and the Cleveland Clinic, Castlight Health, aims to change that by building a search engine for health care prices. Patients using Castlight could search for doctors that offer a service nearby and find out how much they will charge, depending on their insurance coverage....

Price transparency could significantly change the way health care is bought in the United States. The notion “seems ridiculously simple and obvious, and in any other industry, you would say, ‘Duh, we already have that.’ But in health care, it’s revolutionary,” said Alan M. Garber, a professor of medicine and the director of the center for health policy at Stanford, as well as an investor in Castlight.

Pricing transparency is better than pricing opacity. But you can't have a truly efficient and cost-effective health care system with price uniformity. The most revealing fact in the Times story is this:

But so far, prices have been very difficult to find because health insurance providers and doctors negotiate rates and often agree not to reveal those numbers for competitive reasons. The Cleveland Clinic, for example, has about a hundred different contracts with insurance carriers, each with a different rate for a given procedure.

T.R. Reid: For-Profit Insurance Destroys Health Care Delivery

T.R. Reid's indispensable book about successful national health systems, The Healing of America, provides a patient's- and doctor's-eye view of health care delivery in France, Germany, Japan and other countries that provide complete coverage for all residents and pay half to two thirds of what the U.S. pays for health care (as a percent of GDP) with better outcomes. The book induces startling clarity about the key dysfunctions of our system.

Our primary dysfunction is simple. While France, Germany and Japan all rely on private insurance to pay for comprehensive health care, the private insurers are all nonprofit. In all three countries, the government sets uniform rates for all procedures; all providers charge the same rates, and all insurers must pay all claims. In France, every citizen's complete medical history, including procedures performed and their costs, are embedded in a national health card (the carte vitale). Doctors simply record each service performed - and get paid by one of the country's fourteen insurers within a week.

The lesson is clear: U.S-style for-profit insurance for basic comprehensive health care is purely parasitical (for-profits are in the mix in The Netherlands, but they're subject to strict price controls and risk equalization, by which plans with a higher concentration of sick members are paid more). Our for-profit health insurance industry creates a needless bureaucracy, matched in no other country, which it pays itself handsomely to manage, and it makes money by denying claims.

Any reform that makes health insurance available and affordable to all Americans is worth doing. Mandates requiring insurers to cover all eligible comers without differentiating cost according to condition are key; so are mandates laying out minimum coverage standards.

But to meaningfully narrow the gap between health care costs in the U.S. and other rich countries, reform would have to kill for-profit insurance, quickly or slowly. Health care co-ops are actually closer to the system that works so well in France and Germany than a single "public option." But in those countries, the "sickness funds" did not have to evolve in competition with for-profits.

Every industrialized country is wrestling with rising health care costs. In France, the sickness funds operate at a deficit; in Germany, doctors are up in arms because the government keeps imposing new limits on permissible treatments for given conditions. But both countries are continuing to reform from a position way ahead of us, with complete universal coverage, costs 1/2--2/3 of ours, and the government in complete control of rates and mandated coverage.

None of this should be secret. Legions of American health care experts know how things work in Europe and Japan. Senators are reading Reid's book. But as Reid stresses, it's political anathema in the US to suggest cribbing from other countries' successes. Our national 'debate' is obfuscated by lack of full discussion of how successful systems work.