The Trump administration claims it will make healthcare consumer friendly by promoting medical price transparency. The effort is spearheaded by freshly-minted Secretary of Health and Human Services Alex Azar. But Azar’s version of transparency is perversely designed to protect industry revenue, not ordinary Americans.
In healthcare politics, everything old is new again and prices are always pushed skyward. Obama’s Affordable Care Act included rules requiring hospitals to publish their “standard” rates in a consumer friendly format. This provision was never implemented or enforced and if it had been, as explained below, it would not have helped consumers.
In an Obamacare redux, this weeks’ White House Blog post states the Trump Administration’s “reform” concept is to once again require publication of utterly useless “list price” information: “We are also proposing action to increase price transparency in the health-care system. This week, we recommended requiring hospitals to post standard charges for services online in a consumer-friendly manner.”
Ask any hospital, lab or physician the price of anything and all you ever get back is a question: “What insurance do you have?” A simple blood test for cholesterol can range from $10 to $400 or more at the same lab. Hospitalization for chest pain can result in a bill from the same hospital for the same services ranging anywhere from $3,000 to $25,000 or more. Your price depends on how much can be extracted from you on an individual basis, often at your most vulnerable. Consumers are rendered defenseless to price gouging, unable to comparison shop.
Standard list prices (think car MSRP sticker prices) are billed only for the small minority of services performed when no insurance is involved. They often three to 50 times more than the real prices medical providers accept from insurers and consumers who negotiate. As the Wall Street Journal observed: “Many hospital executives dismiss those list prices — also known as charge master prices — as meaningless and misleading, since few patients ever pay them.” The proposal to require publication of this useless information is a gut punch to anyone hoping for common sense reform.
Industry apologists claim everyone is “charged” the exact same thing; it’s just that we all get a different discount. Greased political wheels allow this nonsensical rhetoric to win the day, shielding health providers from price competition.
The solution is simple: Compel medical providers to play by the same rules that apply to all other sellers of consumer goods and services. They should remain free to set their own prices but providers must be prohibited from billing each patient a different amount for the same service.
To promote competition, prices should be stated in a common format. For example, it can be as simple as requiring all providers to state their rates as a percentage of Medicare. Consumers would benefit from being able to find a comparable quality hospital that charges 110 percent of Medicare rates instead of 200 percent of Medicare rates. When pricing is stated in the industry standard Medicare format, consumers can determine before or after the fact, how much they will be charged.
Both political parties pander to the industry which spends more on lobbying than the defense, aerospace, and the oil and gas industries combined. Crony capitalism is the precise reason the healthcare cost problem is far more severe today then at the time of the dire 1985 U.S. economic report, which stated:
“There is also widespread concern that the unit costs of medical care are too high. The cost of a day in the hospital was $369 in 1983, up from $41 in 1965 . . . and the average cost per hospital admission increased from $311 . . . to $2,789 over the same period. Calls are heard to curb the increasing costs of medical care. Policy- makers have an array of options [including] . . . unfettered competition . . .”
The administration’s current proposals continue the historic 35 plus year bipartisan charade to prevent pricing reform. Legitimate pricing would drop medical costs by at least 33 percent overnight and therein lies the problem. The industry would kill to avoid falling prices.
Steven Weissman is a former hospital president.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.