Examining legislation and trends in healthcare pricing: A research agenda for consumer well‐being

• Published date: 01 July 2023
• Author: Deidre Popovich,Kellilynn M. Frias
• Date: 01 July 2023
• DOI: http://doi.org/10.1111/joca.12551

RESEARCH ARTICLE

Examining legislation and trends in healthcare

pricing: A research agenda for consumer

well-being

Deidre Popovich

1

| Kellilynn M. Frias

2

1

Rawls College of Business, Texas Tech

University, Lubbock, Texas, USA

2

Kogod School of Business, American

University, Washington, DC, USA

Correspondence

Kellilynn M. Frias, Kogod School of

Business, American University, 4400

Massachusetts Ave NW, Washington,

DC 20016, USA.

Email: kfrias@american.edu

Funding information

Blue Cross Blue Shield of Texas,

Grant/Award Number: 1131719

Abstract

Healthcare costs continue to rise con siderably in the

United States; one proposed solution is to give con-

sumers more choices regard ing their healthcare deci-

sions. Recent legislation has the aim of making

healthcare pricing more tra nsparent and providing

consumers with an increased unders tanding of costs.

This article offers a research ag enda for studying

healthcare price transpar ency and provides an over-

view of several potential imp lications for consumers.

The authors review the recent l egislation and its

intended impact on consume r shopping in the

healthcare market. Resear ch propositions are focuse d

on healthcare as a unique decisio n context, the power

and peril of price informati on, the emerging

healthcare information mar ket, and individual differ-

ences in consumers. The authors als o illustrate some

of these issues with a pric e transparency dataset.

Opportunities for future res earch and implications for

marketing, healthcare prov iders, and policymakers are

offered.

KEYWORDS

consumer decision making, healthcare, healthcare policy, price

transparency, pricing

Received: 30 September 2022 Revised: 11 May 2023 Accepted: 29 June 2023

DOI: 10.1111/joca.12551

© 2023 American Council on Consumer Interests.

J Consum Aff. 2023;57:1453–1481. wileyonlinelibrary.com/journal/joca 1453

1|INTRODUCTION

Healthcarecostscontinuetorisedramatically in the United States. There is much

debate among politicians and policymakers related to lowering these costs for the

healthcare industry as a whole and for consumer-patients. The United States has one of

the highest costs of healthcare in the world. In 2020, the US healthcare spending

reached $4.1 trillion, which averages over $12,500 per person. By comparison, the aver-

age cost of healthcare per person across severalEuropeancountriesisonlyaboutone-

third as much (Peter G. Peterson Foundation, 2022). Total health expenditures represent

the amount spent on health care and related activities (such as administration of insur-

ance, health research, and public health), including expenditures from both public and

private funds.

Consumers' spending on healthcare climbed by 21.8% between 2015 and 2019. This trans-

lates to an additional expenditure of $1074 per person. For those under 65 and enrolled in an

employer-sponsored health plan, the average annual healthcare expenditure from 2015 to 2019

was $6001 per person (in 2019). The concurrent reduction in the use of healthcare services in

2019 suggests that the majority of the increase in spending is likely due to higher prices rather

than a rise in usage (Bailey, 2021).

One proposed legislative solution is to make the healthcare market more “shoppable.”

1

With the overarching goal of making healthcare more consumer-directed, recent legislation

aims to make pricing more transparent and to aid consumers' understanding of costs. This

strategy suggests that giving consumers more agency, or choice, in their healthcare deci-

sions has widespread potential for cost-savings. Specifically, by giving consumers additional

access to price data, quality information, and financial incentives, they will presumably be

able to select low-cost, high-quality options

2

from those available. For this “consumer-

directed”healthcare model to be successful, consumers must independently shop for and

evaluate providers and hospitals. Nevertheless, the health insurance and provider reim-

bursement system has become more complicated, and average consumers are largely unsure

of how this complex system works and how the cost of healthcare is determined (Arora

et al., 2015).

In this article, the focus is to provide a research agenda for studying consumer decision

making and potential outcomes related to price transparency legislation. The changing leg-

islative environment will invariably lead to new consumption experiences and may result in

some potential drawbacks for consumers. First, we give an overview of federal, and state

legislative activities directed toward slowing the growth of healthcare costs through

increased price transparency. Next, we discuss four primary themes to guide research inter-

est: (1) healthcare as a unique decision context, (2) the power and peril of price information,

(3) the emerging healthcare information market, and (4) individual differences that may

further influence consumer decision making in this context. Within each section, we offer

some insights from the marketing literature that provides theoretical underpinnings for

exploringsomeoftheseissues.Weconcludeby providing a brief examination of a price

transparency dataset and use some preliminary findings from the data to highlight the need

for some of the proposed research questions. This research agenda aims to explore market-

ing, provider, and public health implications of this legislation and offer several areas for

future research.

1454 POPOVICH and FRIAS