Transparency pricing in healthcare

This article in the WSJ reports on the advantages of increasing the transparency of prices. Conduct a Google search of the title if the full article does not appear.

SUMMARY: There's a major effort under way to make sure patients know how much they'll pay-before they make treatment decisions. "Princeton economist Uwe Reinhardt likens using the U.S. health-care system to shopping in a department store blindfolded and months later being handed a statement that says, 'Pay this amount.' The price-transparency movement aims to lift that veil of secrecy and empower patients and other payers to be smarter health-care consumers.... Experts expect consumers to be much more price-sensitive as they shoulder a growing proportion of health costs themselves."

CLASSROOM APPLICATION: Instructors can present two points about the incentives of patients to consider price when choosing health-care providers: price transparency; and consumers paying at least some of the cost of care.

QUESTIONS:

1. (Introductory) Why is better consumer information about health-care prices important in bringing down the cost of health care?

2. (Introductory) Why is more patient responsibility in paying for the price of a procedure important in bringing down the cost of health care?

3. (Advanced) How would better consumer information about the prices of various health care providers for a particular procedure combined with greater consumer responsibility for the price of the procedure affect the cost health care?

4. (Advanced) How would "reference pricing" affect the quality of care? How would it affect the compensation of health-care providers?