Can Price Shopping Improve Health Care?

Now consider LASIK. Over a decade, the cost of the conventional version of the sight-correction surgery has dropped 30% after inflation is taken into account, according to the Center for Studying Health System Change. As doctors rushed to add the lucrative procedure, the market was flooded with price signals about how cheap the surgery could be. Unlike with other procedures, such as in vitro fertilization and getting dental crowns, obtaining an estimate for LASIK usually didn't require an office visit. A phone call would do. The result: even though people tended not to cross certain price bands (at some point, "cheap" signals low quality), transparency still drove down prices through competition. When consumers have clear alternatives, posting prices works.

But perhaps even when the supply of doctors (or hospitals, or pharmacies) is limited, consumers can benefit. After all, what a person really cares about isn't just price, but price matched against quality and outcome. If your doctor recommends a digital mammogram, maybe the high quote on the sheet she hands you will prompt you to ask why the scan needs to be digital instead of on film. Does a digital scan lead to better results? In some cases it doesn't. Next thing you know, you're having a conversation with your doctor about what's going on and why, the sort of conversation people should have with their doctors but rarely do. Nothing gets shopaholic Americans talking like a price tag. And that may have benefits well beyond cost control.

Extra Money

To read a daily take on business and the economy, go to time.com/curiouscapitalist

See TIME's Pictures of the Week.

See the Cartoons of the Week.