The Biden administration and Congress are addressing spiraling costs of health care and health insurance by extending expanded pandemic-era Affordable Care Act (ACA) subsidies in the Inflation Reduction Act. Yet simply transferring rising costs to taxpayers does nothing to address the underlying health care unaffordability crisis. In fact, increasing subsidies makes it easier for health insurers to further raise premiums and pad their record profits. Major insurers have already announced plans to raise ACA exchange premiums by up to 15 to 20 percent next year.
A better way to bend the health care cost curve and make care and coverage affordable is through systemwide health care price transparency. Actual, upfront prices allow consumers to choose the highest quality care at the lowest possible price. Real prices empower patients to avoid rampant hospital overcharging and get the care they need at prices they can afford, expanding access and equity. Price transparency exposes wide price variations for the same care, even at the same hospitals.
A hospital price transparency rule that took effect Jan. 1, 2021 and a health insurance price transparency rule that took effect July 1 of this year can usher in this competitive, pro-consumer health care marketplace. Unfortunately, a new study by PatientRightsAdvocate.org (PRA) finds that only 16 percent of American hospitals are complying with the rule that requires them to post online, in a single file, their discounted cash and health insurance rates by procedure and plan.
The Biden administration can make this rule a reality for consumers and unleash a health care affordability revolution by boosting compliance through robust and timely enforcement.
The PRA study finds that most of the 2,000 hospitals examined do not publish all payer-specific negotiated charges “clearly associated with the names of each third-party payer and plan” as required. America’s largest hospital system, HCA Healthcare, which made $59 billion in revenues and $7 billion in profits in 2021, has a zero compliance rate.
This obfuscation prevents consumer choice. It blocks tech developers from aggregating prices in consumer-friendly web applications similar to Kayak or Expedia. And it impedes competition that makes goods and services affordable in almost every other economic sector.
Hospitals and insurers blind consumers from actual prices, and then blindside them with massive bills they never would have agreed to, weeks and months after care. This opaque dynamic allows American hospitals to charge an average of seven times their cost of care. Last year, the Los Angeles Times reported on leaked hospital pricing practices, revealing automatic 675 percent markups. Health care expenditures have increased at more than double the rate of inflation each year over the past couple of decades.
As a result, 64 percent of patients delay care for fear of financial ruin, and 100 million Americans carry medical debt. A new mini-documentary published by the New York Times profiles ordinary patients bankrupted by this predatory health care system. “I had these procedures done, and now I’m getting the prices?” says one patient. “It just seems like the opposite way of doing things. It should have been prices first.”
The Biden administration can boost hospital compliance through strong and expedient enforcement of the rule. So far, it has fined only two hospitals out of thousands that aren’t complying. Yet these two hospitals quickly became compliant and posted exemplary price files, demonstrating the power of enforcement. The administration can replicate this success by immediately fining other noncompliant hospitals, starting with the 101 that the PRA report finds didn’t even bother to post a price list.
When all hospitals post their actual prices, consumers can enjoy peace of mind that their care won’t result in bankruptcy. They can choose to pay $300 for an MRI, rather than $3,000, or $6,000 for a C-section, rather than $60,000.
Employers, who provide coverage to most Americans, can steer their employees to quality, less expensive care and share the ensuing savings in the form of higher pay, helping workers to contend with historic inflation. When prices are known, no employer will tolerate paying 10 times more than their competitors for the same care, even at the same hospital.
Policymakers looking to make health care affordable should take note: Systemwide price transparency can actually reverse runaway costs for health care and health insurance, rather than merely transferring these costs to taxpayers. The Biden administration should be applauded for its efforts to increase access to health care. But now it must address affordability. Robust and timely enforcement of the hospital price transparency rule can significantly lower costs through choice and competition and put the “affordable” back in the Affordable Care Act.
Cynthia A. Fisher is a life sciences entrepreneur, founder and chair of PatientRightsAdvocate.org, and the founder and former CEO of ViaCord.