Five years after hospital price transparency—why aren’t healthcare prices cheaper?
In 2021, the Centers for Medicare and Medicaid Services issued new rules requiring hospitals to post publicly available price lists for 300 common services (such as planned surgeries, X-rays, and MRIs). The idea was simple; if patients could compare prices, they would shop for cheaper options. That, in turn, would spur competition among hospitals, drive down costs, and ultimately make health care more affordable.
Yet five years later, Americans are spending even more on health care and, as of 2023, national health spending continues to outpace inflation. The effects of the rule, if any, have been minimal. Why hasn’t price transparency made health care more competitive? And what can this experiment teach us?
First, hospitals account for roughly 30 percent of health care spending––but they’re only part of the problem. Costs are also rising because of an aging population, higher physician fees, and escalating drug prices, many of which are beyond hospitals’ control.
Second, few people even know the information exists. A Gallup survey conducted from late 2023 to early 2024 found that 73% of Americans were unaware they could look up hospital prices for common services. Among adults over 65, the group most likely to need care, just 11 percent had ever checked a price before going to the hospital.
Third, compliance is highly variable; a 2024 report by the Department of Health and Human Services’ Office of Inspector General found that only 63 of 100 hospitals in a random sample were following the rule. Many post incomplete data, or report it in ways that are not accessible to most patients.
Fourth, patients don’t behave like typical consumers. Patients often value trust and continuity with their doctors and are usually insulated from sticker prices by insurance. Even if one hospital charges less, patients’ out-of-pocket costs largely depend on their insurance design––and lower prices rarely translate into smaller bills. Hospital prices also exclude physician fees, which can be out-of-network and substantial.
Finally, for many Americans, there’s no real choice. In 2022, nearly half of all metropolitan areas had only one or two hospital systems providing inpatient care. In rural communities, where patients live twice as far from a hospital, or lack transportation altogether, the idea of “shopping” for care is largely meaningless.
So what can we learn from the hospital price transparency experience?
One lesson is clear: transparency may be necessary to decrease healthcare prices, but it certainly isn’t sufficient. Even with greater enforcement of existing regulations, publishing prices alone can’t fix a market where patients don’t shop, hospitals don’t compete, and insurers obscure true costs.
As a preliminary step, regulators need to enforce existing price transparency rules. In 2025, President Trump issued an executive order calling for greater enforcement of hospital price transparency rules, and the Center for Medicare and Medicaid Services (CMS) issued a formal Request for Information soliciting public input to improve enforcement. Awareness, accuracy, and usability also matter. Currently, it is not possible for CMS to determine if the prices published by hospitals are complete and accurate. Patients can’t act on data they can’t find or understand. Hospitals must offer clear, consumer-friendly tools that estimate real out-of-pocket costs, not just post dense spreadsheets meant for regulators.
Policymakers also should be realistic about the potential impact of transparency rules. If price transparency were to have an impact, we would expect it to be greatest on self-pay patients (who are most cost-sensitive), shopping only for elective services. In a study of Florida hospitals conducted by researchers from the Brookings Institute and published in the journal Production and Operation Management, this “best-case scenario” resulted in a nearly 25% reduction in prices for strictly elective services, and a 12% reduction for self-pay patients overall. These numbers may be close to the theoretical ceiling for price transparency.
Most importantly, transparency is meaningless without competition. The U.S. healthcare market is now more consolidated than at any time in history and has experienced significant horizontal and vertical integration over recent year in the past several years—partially driven by increased private equity investment. Hospital consolidation increases costs for everyone. Policymakers and lawmakers should advocate for solutions to increase antitrust enforcement mechanisms, such as allowing the Federal Trade Commission to take enforcement actions against not-for-profit corporations, increasing budgets of agencies tasked with enforcing antitrust laws, and introduce reporting requirements for even small hospital mergers.
Despite the difficulties inherent in transparency, it shouldn’t be abandoned, just understood for what it is––one piece of a larger puzzle––and not a fix. Policy solutions should address flaws in existing price transparency rules and simultaneously address other causes of high prices in the U.S. healthcare system. Price transparency remains a worthy goal. But to be effective, it must be coupled with meaningful enforcement, real competition, and better tools for the people it was meant to help.
Research for this piece was supported by Arnold Ventures.
