This year is proving to be one where legislators on both sides of the aisle attempt to work together to tackle increasing health care costs, and the president is determined, too.
In June, the Trump administration announced its plan to sign an executive order that would require health care providers and insurance companies to disclose the negotiated prices of services to the public. The intent of the disclosures is for increased price transparency to save patients money on their health bills, but in actuality, many unseen risks threaten to do just the opposite.
While it might seem as though informing patients about how much their treatments actually cost would allow patients to shop around for less expensive services, those costs are not the only aspects of a patient’s final bill. The price of a co-pay or medical bill is widely dependent not only on the treatment itself but on several factors including insurance coverage, location, pre-existing conditions, family history and much more. The negotiated cost of treatment only accounts for a fraction of the final price.
According to a study in the Journal of the American Medical Association, providing pricing tools to those shopping for health care did not lower aggregate outpatient spending. Instead, patients tended to associate low costs with inferior care, which led them to spend more on expensive options that were not necessarily a reflection of quality. So, patients are met with a lose-lose scenario of expensive treatments with poor quality or affordable treatments with perceived inferior care.
“Transparency for transparency’s sake, and forced disclosure of thousands upon thousands of competitively negotiated rates, will not help consumers,” said Matt Eyles, president of America’s Health Insurance Plans. “Instead, it will cause health care costs to go up for every American. To improve access and affordability, we need to work together to improve competition, choice and collaboration.”
And he’s right. The mandate would open patients to higher costs with less accessible health care.
For rural Americans, it is not always easy to get to a hospital or care center. Sixteen percent of Americans live 30 miles or more from the closest hospital or emergency center. These Americans don’t have the same opportunities as city residents to shop around for the lowest-cost care in their area if there is only one hospital within a 45-minute drive.
With these forced price disclosures, health care providers and insurers may begin exclusive partnerships, restricting physicians from working with other insurers. But what if someone experiencing a health emergency has the “wrong” insurance for the closest hospital? Will he or she be refused care?
Not to mention, publicizing negotiated rates is an anti-competitive practice that directly opposes free-market principles. When companies don’t know what prices their competition is offering, they must offer lower prices in order to stay competitive and drive business. However, if all prices are public, that incentive goes away.
In its place, competitors could collude on prices to artificially drive them higher, ensuring larger profit margins for themselves and more expensive care for consumers. The Federal Trade Commission has been warning against anti-competitive practices such as price disclosure since the Obama administration and is still against it to this day.
I wish there was a simple, one-step process to lowering health care costs — but this proposal just isn’t it. Bringing the complexities of the health care system to light will not lower costs to patients like the administration hopes it will.
The evidence is not there to ensure that disclosing negotiated prices will absolutely lower health care costs. Without this promise, it’s simply not worth putting patients at risk.
I urge my state lawmakers to join me in opposing this executive order and championing a healthy, free-market health care system. As rural hospitals continue to close, many American lives depend on it.
Pat Kopecki, a former editor of the Wilson County News in Floresville, Texas, currently serves on the Rural & Agriculture Council of America.
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