US healthcare cost transparency: Does lesson from Denmark translate?

Research about how the Trump administration's executive order on healthcare cost could affect prices is scarce. For healthcare scholars, this means reading studies from other markets — such as the ready-mix concrete market in Denmark — for clues, according to The New York Times.

In healthcare price transparency debates, health economists often cite a 2003 study that analyzed how a Danish regulation aiming to improve concrete competition in the early 1990s affected manufacturers. The government required the concrete-makers to disclose negotiated prices with their customers. 

The study found the requirement led prices for ready-mix concrete to increase 15 to 20 percent. Scholars concluded the reason for the price increase was collusion between the market's few manufacturers. Since they knew their competitors' prices, they could all raise prices at the same time, according to The New York Times

Opponents of Trump's June 24 executive order, which directs HHS to develop rules requiring hospitals to publish prices they negotiate with payers, may point to the study as they fight this type of price transparency. Some may argue the executive order, like the Denmark regulation, could do the opposite of its intention: cause prices to increase rather than decrease. 

It's unclear how similar the Danish ready-mix concrete business in the 1990s is to modern American healthcare. Per Baltzer Overgaard, one of the authors of the Danish concrete study, told The New York Times, "I'm sure there are some similarities between pricing of various healthcare services and ready-made concrete in Denmark in the early 1990s, but I'm also sure there might be huge differences."

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