Since 2021, federal rules have required hospitals to post their prices online. Insurers followed with their own disclosure mandates. The logic seemed straightforward: armed with price information, patients would shop for better deals, driving competition and lowering costs.

Three years into this transparency experiment, the results are decidedly mixed. Compliance remains uneven, the data often proves incomprehensible to ordinary consumers, and evidence of meaningful behavior change remains frustratingly scarce. The policy rests on assumptions about healthcare markets that may not hold in practice.

Understanding why transparency alone hasn't transformed healthcare pricing reveals important lessons about policy design. Information is necessary but rarely sufficient to change entrenched systems. The gap between posting prices and creating genuine market pressure exposes deeper structural challenges that no disclosure requirement can address on its own.

Hospital compliance with price transparency rules has improved but remains incomplete. Early assessments found fewer than 30% of hospitals meeting full requirements. By 2023, estimates suggested roughly 70% compliance, though definitions vary widely. Many facilities post files that technically satisfy the rule while remaining practically useless to patients seeking actionable information.

The format problem proves as significant as the compliance problem. Hospitals often publish massive machine-readable files containing thousands of line items using billing codes incomprehensible to anyone without specialized training. Finding the price for a specific procedure requires navigating complex spreadsheets and understanding the difference between gross charges, negotiated rates, and cash prices.

Insurer transparency rules, implemented in 2022 and 2023, added another layer of complexity. Health plans must now disclose negotiated rates with providers, generating enormous data files that can exceed hundreds of gigabytes. These disclosures reveal significant price variation—the same procedure at the same facility can cost dramatically different amounts depending on which insurer is paying.

Enforcement has been inconsistent. The Centers for Medicare and Medicaid Services can impose penalties of up to $300 per day for non-compliance, later increased to over $5,000 daily for larger hospitals. Yet actual enforcement actions remain rare, and the financial penalties pale compared to hospital revenues. Without meaningful consequences, some facilities appear to have calculated that incomplete compliance carries acceptable risk.

Takeaway

Disclosure requirements create data without necessarily creating usable information. The technical compliance rate matters less than whether patients can actually find and understand the prices that affect their care decisions.

The fundamental premise of price transparency policy—that patients will use price information to make cost-conscious choices—faces serious empirical challenges. Research consistently shows that very few patients actively compare prices before receiving care, even when tools exist to facilitate comparison.

Several factors explain this gap between theory and practice. Most healthcare decisions occur under circumstances that discourage shopping: emergencies, referrals from trusted physicians, limited network options, or clinical situations where patients feel unqualified to choose based on price. Even for shoppable services like imaging or routine procedures, patients often prioritize convenience, physician recommendations, or quality perceptions over cost.

Insurance design further dampens price sensitivity. When patients face flat copayments regardless of the underlying price, they have little financial incentive to seek lower-cost options. High-deductible plans theoretically create more price consciousness, but research suggests even these patients rarely compare prices systematically. The cognitive burden of navigating healthcare pricing exceeds what most people will undertake for individual decisions.

Some evidence suggests employers and insurers use transparency data more effectively than individual patients. Third-party companies analyze disclosed prices to negotiate contracts or steer employees toward lower-cost providers. This wholesale use of transparency data may prove more consequential than retail patient shopping, though it operates invisibly to most consumers.

Takeaway

Information alone cannot overcome structural barriers to healthcare shopping. Until patients face genuine financial consequences for price differences and have practical tools for comparison at the point of decision, transparency data will remain largely unused by those it was designed to help.

Price transparency addresses an information asymmetry but leaves untouched the market power asymmetries that drive healthcare costs. Knowing that one hospital charges twice as much as another matters little when your insurance network includes only the expensive option, or when the lower-cost facility lacks capacity, or when your physician has privileges at only one location.

Effective price competition requires conditions that rarely exist in healthcare markets. Patients need time to make decisions, meaningful alternatives to choose among, quality information to accompany price data, and financial stakes that make shopping worthwhile. Creating these conditions requires interventions well beyond disclosure mandates.

Some jurisdictions have experimented with complementary policies. Reference pricing sets maximum reimbursement levels, exposing patients to costs above that threshold and creating genuine incentives to choose lower-priced options. Network adequacy requirements could expand patient choices. All-payer claims databases enable more sophisticated analysis of price variation and its determinants.

The most significant impact of transparency rules may be indirect. Published prices create accountability and enable journalism, research, and advocacy that pressure outlier facilities. Employers armed with comparative data can negotiate more effectively. State regulators can identify pricing practices that warrant investigation. These wholesale applications of transparency data may accomplish what retail patient shopping cannot.

Takeaway

Transparency policies work best as one component of a broader strategy that also addresses network restrictions, benefit design, and market concentration. Expecting disclosure alone to discipline healthcare prices misunderstands how these markets actually function.

Healthcare price transparency rules have succeeded in generating unprecedented amounts of pricing data while failing to produce the competitive dynamics their architects envisioned. Compliance has improved, but the gap between technical disclosure and practical usefulness remains substantial.

The policy's limited impact reflects not a failure of transparency as a concept but an incomplete theory of change. Information matters, but it cannot substitute for the structural conditions that enable genuine competition. Patients need more than prices—they need choices, incentives, and practical support for navigating complex decisions.

Future policy development should treat transparency as necessary infrastructure rather than a complete solution. The disclosed data enables other interventions, from reference pricing to antitrust enforcement, that can translate information into meaningful market pressure.