It could raise prices. Consumers have some incentive to care how much they are spending on health care, but they aren't generally the claimant on savings they realize for their insurance plans. (Obviously the incentives for uninsured or self-insured patients (to the extent that there's anyone in the latter category) are quite different, but those populations are small.)

On the other hand, every hospital has a strong, strong incentive to care a lot about how much their competitors are getting for the same procedures. (Much more than consumers, for example.)

It's possible that these disclosures lead to prices falling as hospitals seek to undercut each other. However, most US hospital markets feature a small number of competing hospital systems in an oligopoly. The price-cutting pressures in such markets are much, much weaker. There is a "mutually assured destruction" aspect to price competition in such markets which may keep prices from falling.

The latter incentive can raise prices too. IF you know your competitors across town are getting an extra $5,000 for a knee replacement and you know that the two of you are the only game in town for hospitals, you may raise your prices rather than lowering them.

On balance I think this is the right policy, in part because I want this data myself as a researcher. But it is not unambiguous that this will lead to price reductions.

Source: am a health economist.

We're introducing more information into the market. If some prices went up as a result, isn't that an indication that the lack of pricing information was being used to artificially depress prices?

If so.. this isn't a "backfire" so much as an "obvious and necessary correction?"