TRANSPARENCY IN THE HEALTH INSURANCE MARKET

There is a remedy for shaking up the private health insurance market: increased transparency. And unlike the public option, this is actually favored by voters.

Americans overwhelmingly want the government to require that performance ratings on hospitals and doctors be publicly available, say Regina Herzlinger, a senior fellow at the Manhattan Institute, and Peter Pronovost, a professor of anesthesiology and critical-care medicine and health policy and management at Johns Hopkins University.

Transparency could stimulate competition by revealing which insurance companies and policies provide the most medical-care benefits and best outcomes per dollar, which ones offer the best doctors and hospitals, and which ones hassle sick people the least.

Armed with answers to these questions, consumers could reward best value. If insurers with lackluster scores do not improve, competitors would enter this surprisingly entrepreneurial market. (The leading providers of high-deductible insurance, for example, were formed only nine years ago.)

Further, the mere act of providing data motivates providers to effect changes, a phenomenon known as "the audit effect,":

• The CBO estimated that sharing peer-profile scorecards with physicians would save Medicare $350 billion from 2010 to 2014.
• Evidence confirms that hospitals respond to publicly reported data with efforts to improve patient care and their standing in reports.

Transparency can also spur the adoption of important innovations:

• For example, although Johns Hopkins researchers virtually eliminated one type of hospital infection in Michigan intensive-care units, this intervention disseminated slowly, probably because infection rates are invisible.

This life-saving program would have spread much faster were the public aware of infection rates...

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