By Dr. Joy Martinez
If choice drives pricing by giving power to the consumer to compare, contrast, and force competition, then the President just gave more power to the people. Trump signed an Executive Order requiring hospitals and insurers to provide transparent pricing and rates, and well as an estimate of out-of-pocket costs before procedures.
Alongside price transparency, the administration will give researchers and health care providers data to “help them develop tools to provide patients with more information about health care prices and quality,” according to the White House. There is more to the Executive Order, as it expands the benefits of Health Savings Accounts and other tax-preferred health accounts, allowing people to do more with the savings they have put aside.
During a press briefing, Health and Human Services Secretary Alex Azar said, “This will put American patients in control and address fundamental drivers of health care costs in a way no president has done before.”
Earlier this year, the Trump administration announced new requirements for pharmaceutical companies, requiring them to disclose the price of their prescription medicines in TV ads starting in July.
In January, new rules took effect under the new requirements that require hospitals to post online their list prices. These are prices hospitals set—the amount they would like to receive—but they are far from actual costs or what insurers actually pay. List prices don’t show the discounted rates insurers have negotiated, so they can’t be used by insured patients who want to compare prices before a procedure or visit.
Currently a patient typically sees true pricing or the negotiated rate after medical care is provided when insured patients get an explanation of benefits, (EOB), which shows how much the hospital charged, how much of a discount their insurer received and the amount a patient may owe.
Negotiated rates are closely guarded secrets, neither the provider or the insurer wants competitors to know the details of deals they’ve put together. Medicare pricing is publicly available, but some argue private insurers’ contractual rates are the same as trade secrets and should be private.
However, the EOB that arrives in our mailboxes around the same week as our shockingly high medical bill spells out the list price, the negotiated price, and the out-of-pocket cost. It’s hard to accept information as trade secrets that are printing and mailed for all to see.
The lack of information in health care is a widespread problem. Trump has called for additional legislation that would ban “surprise medical bills,” when patients receive care from a doctor in a hospital who isn’t covered by their insurance.
According to the President, “We’re taking power away from bureaucrats, we’re taking it away from insurance companies and away from special interests, we’re giving that power back to the patients… [bringing costs] way, way down.”
There are those that push back against the idea that choice and competition drive prices. Some argue health care is different as an industry and if word gets out about negotiated rates, companies will simply raise their currently discounted prices to match the highest rates.
They say healthcare as an industry has a “sticky ceiling” and prices will go up as consumers know more about their back room dealings and secret contracts.
In 2017, President Trump signed Executive Order 13813, directing the Administration, to the extent consistent with the law, to “facilitate the development and operation of a health care system that provides high-quality care at affordable prices for the American people by promoting choice and competition.”
This looks like one more step in a long journey toward health care that keeps us living longer without breaking our budgets and our banks.