One of the underpinnings of a capitalistic system is the notion of perfect information. The theory is that if consumers have complete information about a product — price, quality, etc. — they will be better able to make purchasing choices. On the flip side, companies that provide the best products for the best price will survive and thrive.
At least that’s the short explanation; we aren’t here to write an economics dissertation. But it is disconcerting when a free-market company, having found a way to profit from imperfect information, works to limit information available to consumers.
Such is the case with Premera Blue Cross and House Bill 2572 in the Washington Legislature. The bill, which would have made it mandatory for health insurance companies to report all claims to a statewide database, was designed to provide consumers with information. The idea: Let the public know the costs upfront, as if they were purchasing a gallon of milk or a box of nails.
The bill, which was requested by Gov. Jay Inslee and had the support of various consumer groups and business groups, was passed out of the House and sent to the Senate. That is where Sen. Randi Becker, R-Eatonville and chairwoman of the Senate Health Care Committee, gutted the mandatory reporting provision at the urging of Premera Blue Cross.
“We support transparency,” Premera spokesman Eric Earling told The (Spokane) Spokesman-Review. “We’d like to see more of it.” But, he added, price information is not helpful for an individual consumer unless it is presented together with information about the consumer’s own coverage details such as deductibles and co-pays.
In other words, translating Earling’s gobbledygook, consumers aren’t smart enough to figure out whether such information is beneficial. Rarely has big business been so condescending in so few words. Premera, by the way, is the state’s largest health insurer and reported revenue of $7.2 billion for 2012, according to its annual report.
But even more disconcerting than a company acting to protect its proprietary concerns is the willingness of the Senate to keep consumers in the dark. As Rep. Eileen Cody, D-West Seattle and chairwoman of the House Health Care and Wellness Committee, said: “It doesn’t matter is you’re buying a loaf of bread or a new car or bypass surgery — consumers should have access to critical information on quality and price before they make a purchase.”
Patrick Connor of the National Federation of Independent Businesses, testifying before the Senate committee, said: “Each time we come forward asking for more transparency, more access to information, the concerns of the health insurance carriers about not wanting to participate seem to trump those of the consumers who desperately need more good information to help control health care costs.”
To top it off, 14 states have adopted mandatory reporting of health care costs. Washington legislators should be eager to add our state to that list rather than caving under the presumption that consumers can’t figure out how to make use of such information.
The notion of perfect information long has been a misnomer in large markets. It is applicable in a small system such as choosing between two pairs of shoes that are next to each other on the shelf, but is unrealistic when considering something as vast as health care. Yet one of the benefits of the Internet age is that consumers are infinitely closer to having perfect information. Premera Blue Cross — and the state Senate — should not be fearful of the public having access to such knowledge.
