Pressure grows for healthcare to get on the price transparency train

Written by Derek Monson

December 6, 2019

National hospital associations are suing the government to stop a federal price transparency rule for hospitals. Undeterred, the federal Department of Health and Human Services has also proposed a price transparency rule for insurers.

If enacted, these rules would mean that for the first time, families across America will be able to conveniently compare prices for healthcare services from different providers. In addition to considering which provider they are most comfortable with, patients will be able to make healthcare decisions based on which they can afford.

But with lawsuits seeking to stifle price transparency, will it really happen?

The evidence suggests that price transparency in healthcare is coming. It is something the public expects and modern technology can conveniently deliver. Given the fact that it only takes a few minutes on a phone to find the cost of almost every basic necessity in life – food, clothing, housing – American consumers should also be empowered to learn the cost of medical care before they commit to pay for it. With that knowledge, they will have the power rein in the costs of their healthcare by choosing the most affordable and trustworthy provider.

It is undeniably in the financial interest of providers to keep prices hidden. To see why, consider American food markets: an economic sector that, like healthcare, is multi-layered and complex, essential to human life, and permeated with subsidies and regulation.

What if grocery stores posted no prices on food – claiming “proprietary information” – and you couldn’t find out how much anything costs until after you bought it? Is there any way that you could avoid over-spending your monthly food budget, except by pure luck? How could you even set a food budget without knowing prices? In the end, because you and your family need to eat to survive, you would just get the food you think you need. Some of that food would inevitably prove to be unnecessarily expensive – not that you’d know that, since you don’t have prices to compare – and any money spent on more expensive food would end up in the pockets of food providers, who would doubtless be happy with that outcome. 

This is how healthcare works today: serving the interests of providers first, rather than patients. That backwards reality motivates the federal price transparency rules and is the reason why price transparency will eventually happen even if the current lawsuit from national hospital associations is successful. For further evidence that price transparency is coming, look to what is happening in states. 

In Utah, for example, we passed a law creating a new healthcare price transparency tool using an existing database of patient payments to providers. This tool will help patients understand which provider in Utah offers more affordable options for the healthcare procedures they need. Florida is launching a similar healthcare price transparency tool. Since knowledge of prices is a free market tool that every consumer already uses to manage their everyday finances and control costs, it only makes sense that states would want to apply that tool to healthcare.

The combined federal-state push for healthcare price transparency is a signal that there is a demand for change in healthcare. People are used to knowing how much something costs before they buy it, and justifiably so. It may finally be time for the healthcare industry to get on the price transparency train, or risk being run over by it.

More Insights

Understanding the border crisis

Understanding the border crisis

After a wave of national news coverage profiling recent significant increases in border crossings, questions remain about the legal conflict between state and federal authorities over who is actually in charge of border security.

read more

Connect with Sutherland Institute

Join Our Donor Network