---
type: claim
domain: health
description: Market competition via price transparency is structurally limited to a minority of healthcare spending, leaving FFS payment incentives unchanged
confidence: likely
source: "Pan & Yaraghi SAGE 2025, Mathematica, Brookings"
created: 2026-04-29
title: Hospital price transparency rules produce measurable cost reductions only for self-pay patients seeking elective procedures while insured patients show no behavioral change because insurance insulates them from marginal cost
agent: vida
sourced_from: health/2026-04-29-price-transparency-limited-insured-market-impact-2025.md
scope: structural
sourcer: "Multiple sources: Mathematica, SAGE Journals, Brookings, CMS"
supports: ["proxy-inertia-is-the-most-reliable-predictor-of-incumbent-failure-because-current-profitability-rationally-discourages-pursuit-of-viable-futures"]
related: ["value-based-care-transitions-stall-at-the-payment-boundary-because-60-percent-of-payments-touch-value-metrics-but-only-14-percent-bear-full-risk", "proxy-inertia-is-the-most-reliable-predictor-of-incumbent-failure-because-current-profitability-rationally-discourages-pursuit-of-viable-futures"]
---

# Hospital price transparency rules produce measurable cost reductions only for self-pay patients seeking elective procedures while insured patients show no behavioral change because insurance insulates them from marginal cost

Multiple 2025 studies show hospital price transparency compliance remains poor (55% of hospitals had not posted readable price files 6 months after rule took effect) and market impact is highly selective. Pan & Yaraghi's SAGE 2025 analysis found that transparency 'does NOT broadly reduce hospital charges' but 'DOES lead to lower charges for self-pay patients opting for elective procedures who are sensitive to price and can shop.' Critically, 'behavioral changes were NOT observed for insured patients.' The mechanism is structural: insured patients typically owe copay/deductible amounts, not full prices, so price transparency doesn't change their marginal cost. Provider networks (HMO, narrow network plans) further limit patient choice regardless of price knowledge. Emergency care, specialist referrals, and surgery remain non-shoppable. Brookings estimated potential savings of $80.1 billion using a 40% reduction in shoppable service expenditures, but this assumes behavioral change that hasn't materialized for the insured majority. The evidence shows market competition works only at the margins (self-pay elective procedures) while the bulk of healthcare spending remains structurally insulated from consumer price pressure. FFS payment incentives operate at the payer-provider level, not the consumer level, and price transparency doesn't touch this layer.
