Reducing Costs and Improving Value Through Transparency and Patient Incentives in Public Insurance

Abstract The escalating costs of public healthcare in the United States necessitate innovative policy mechanisms that promote both transparency and efficiency. This paper proposes a market-driven reform targeting Medicare and Medicaid systems through two key strategies: (1) mandating public disclosure of itemized medical costs and success rates by all healthcare providers, and (2) introducing a partially capped, government-issued healthcare debit card for beneficiaries, tied to the national per-capita spending average. Unused funds would partially roll over annually, incentivizing frugal, value-conscious healthcare decisions. High-cost care remains accessible through an appeal process, though with built-in administrative friction. This dual approach aims to align provider competition with patient selectivity, encouraging downward pressure on prices and more efficient allocation of public funds. The policy leverages behavioral economics and transparency to transform patients into active participants in healthcare markets, potentially reducing government expenditures while improving quality and access.