Price Transparency’s Impact on Hospital Prices: An Analysis of the 2021 Hospital TransparencyFinal Rule

Abstract

Health care expenditures in the United States have risen steadily for decades, imposing a growing financial burden on patients. In response, President Trump signed an executive order in 2019 requiring hospitals to publicly post the prices of 300 common procedures on their websites that was implemented in 2021. Prior research suggests that price transparency can either increase or decrease prices. This study employs ordinary least squares (OLS) and a difference-in-difference (DiD) framework to evaluate whether the executive order reduced service prices between 2018 and 2022. I hypothesize that prices decline in highly competitive hospital markets but rise in less competitive markets following the transparency mandate. Results indicate no statistically significant change in prices across varying levels of market competition as hospitals became more transparent. The results may be attributed to low compliance rates with the price transparency executive order between 2021-2022.