A new lawsuit filed by a government watchdog organization is exposing how and why price transparency in health care — something made mandatory during the Trump administration — still isn’t happening in the United States.
The lack of price transparency in health care has long been a headache for patients, who often have to wait until after they’ve consumed healthcare services to find out how much they owe. Five- and six-figure medical bills can (and do) lead to bankruptcies or require patients to borrow money to pay them off. Americans borrow more than $88 billion annually for this reason.
And worse, the lack of price transparency leads some Americans to avoid care altogether, even when this could harm their health. But when prices are unknown and likely unaffordable, patients stay home. One in four Americans skip a treatment or screening due to costs. As enrollment in high-deductible plans has increased, this problem is only getting worse. Some 80% of non-chronically ill patients do not meet their deductible each year.
The frustration with hidden healthcare prices is so universal that 90% of Americans support public policies requiring hospitals and medical providers to disclose their prices. This level of agreement is almost unheard of in politics — particularly in today’s polarized environment.
Perhaps in part due to this high level of public support, the Trump administration acted in 2019 to make price transparency a reality. Through a series of regulations, the administration put in motion a plan to require hospitals to provide patients with prices, meaning our out-of-pocket costs, as well as the rates, markups, discounts and payments others pay on our behalf. This information obviously would help patients, but also employers, who have a stake in these costs.
But now it’s 2023, and Americans might rightly question whether these rules have been effective. Patients are still in the dark about most healthcare prices. Most hospitals don’t make pricing information easily available. Only 24.5% of hospitals are fully compliant with the new rules. We don’t know what negotiated rates our insurers pay on our behalf for healthcare services or drugs (unless again, it’s after the fact and we are reading an Explanation of Benefits).
What gives? A law is a law, is it not?
Sadly, the answer lies with how the new price transparency rules have been enforced, or more accurately, not enforced.
The lawsuit filed by government watchdog Foundation for Government Accountability (FGA) makes this very complaint: The agencies charged with implementing healthcare price transparency have failed to do so. And worse, they’ve violated the normal legal process for changing regulatory law that requires a “notice and comment” period so members of the public and stakeholders can weigh in.
Through a series of FAQs, delays, exceptions and “indefinite pauses” on certain price transparency requirements — likely in response to pressure from the healthcare industry — the Departments of Health and Human Services, Labor and Treasury took actions that ultimately have denied the American people the price transparency we deserve.
There are many reasons why healthcare price transparency is necessary. Patients deserve better information and choices, so that they can shop around for the best value. Approximately 90% of healthcare services are not consumed in emergency situations, meaning patients have time to shop around. But even if patients don’t want to shop, price transparency will help them plan ahead for healthcare expenses. Furthermore, accurate price information gives patients leverage and helps them avoid getting overbilled.
Price transparency is also a means to an end: It will drive greater competition in health care, which will ultimately result in lower costs. The average American household of four spends $30,260 per year on health care and coverage. Today, cash prices for health care are 40% lower than prices insurance companies negotiate. If price transparency were to lower all prices to the competitive cash rates, the average family could save $12,000 per year.
But the lawsuit filed by the FGA underscores yet another reason our federal government should be working to make price transparency a reality: Because it’s the law.
Given the extremely high public support for greater transparency in healthcare pricing, it’s understandable why the small minority of powerful players who oppose it would prefer to do political battle behind closed doors.
But their actions, and the consequences of those actions, should be brought to light. More, they should be rectified. And if this watchdog-led lawsuit is successful, they will be. The American people have waited long enough for clear, fair, affordable healthcare prices.
Hadley Heath Manning is vice president for policy at Independent Women’s Forum.
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