Transparency in Health Care: Colorado's New Tool

Economics 101 teaches us that there are several fundamental conditions for competitive markets to function: 

  • Consumers of products and services have sufficient information to make informed choices about what they consume.
  • There is relatively easy entry and exit of suppliers.
  • Consumers pay for what they consume.

It can be argued that in many respects our health care marketplace fails to meet these basic requirements.  The Center for Improving Value in Health Care (CIVHC) is trying to do something about the first condition - transparency of information. 

CIVHC on Thursday released initial results from the All Payer Claims Database (APCD).  Funded by The Colorado Trust and the Colorado Health Foundation, the APCD currently includes the medical claims for around 2 million Coloradans over a three-year period.

What we saw at the launch is that significant variation in expenditures for health care services exists across health care providers in Colorado as well as throughout geographic regions of our state.  And this geographic variation persists whether we analyze individuals who are commercially insured or enrolled in Medicaid.  In 2013, we will learn about the costs associated with the prevalence of chronic disease and pharmaceutical drugs.  In addition, consumers will be able to compare the costs of services as different providers and across plans.    

The APCD introduces transparency for consumers, providers, payers and policymakers in an area that has been, thus far, relatively opaque.  Information regarding costs helps consumers make informed decisions about where to get their care, helps providers understand how they perform relative to their peers, helps health plans understand market reimbursement and helps policymakers develop options that address the cost trajectory.  We look forward to more results from this rich source information. 

We cannot manage what we cannot measure.  The APCD gets us one step closer. 

Amy Downs is a vice president at CHI.