Trump administration pushes to make health care pricing more transparent

Written on Jul 08, 2019

President Trump signed an executive order June 24 on price transparency in health care that aims to lower rising health care costs by showing prices to patients. The idea is that if people can shop around, market forces may drive down costs.

Like several of President Trump's other health policy-related announcements, the executive order doesn't spell out specific actions, but directs the Department of Health and Human Services to develop a policy and then undertake a lengthy rule-making process.

HHS Secretary Alex Azar outlined five parts of the executive order, two of which are directly related to price transparency. It directs the agency to draft a new rule that would require hospitals to disclose the prices that patients and insurers actually pay in "an easy-to-read, patient-friendly format," Azar said.

The new rule should also "require health care providers and insurers to provide patients with information about the out-of-pocket costs they'll face before they receive health care services," he added.

The idea is simple. Health care is an industry where consumers don't have access to the kind of information they have when making other purchasing decisions. The executive order could — if it leads to finalized, HHS rules — pressure the industry to function more like a normal market, where quality and price drive consumer behavior. Some consumer advocates welcomed the move.

Exactly how the rules the executive order calls for would work is still to be determined, administration officials said.

Push back from various corners of the health care industry came quickly, with hospital and health plan lobbying organizations arguing this transparency requirement would have the unintended consequence of pushing prices up, rather than down.

"Publicly disclosing competitively negotiated, proprietary rates will reduce competition and push prices higher — not lower — for consumers, patients, and taxpayers," said Matt Eyles, CEO of America's Health Insurance Plans in a statement. He says it will perpetuate "the old days of the American health care system paying for volume over value. We know that is a formula for higher costs and worse care for everyone."

Some health economists and industry observers without a vested interest expressed a similar view. Larry Levitt, senior vice president for health reform the Kaiser Family Foundation, tweeted that although the idea of greater price transparency makes sense from the perspective of consumer protection, it doesn't guarantee lower prices.

"I'm skeptical that disclosure of health care prices will drive prices down and could even increase prices once hospitals and doctors know what their competitors down the street are getting paid," Levitt wrote.

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