Price Transparency Will Lower Health Care Costs

June 14, 2021 • This commentary was originally published in the Washington Times.

Kevin Roberts, Ph.D.

Kevin Roberts, Ph.D., is the former Chief Executive Officer of the Texas Public Policy Foundation. A lifelong educator, Roberts earned his Ph.D. in American history from The University of Texas, thereafter serving as a history professor, and ultimately starting his own K-12 school, John Paul the Great Academy in Louisiana.

Brooke Rollins

Brooke Rollins is the senior advisor to the Foundation. She was the former director of the Domestic Policy Council at the White House and prior to that role ran the Office of American Innovation. She led the White House’s efforts to pass the historic First Step Act, a bipartisan win for criminal justice reform. After her stint in the White House, she founded the America First Policy Institute, and she serves as its president and CEO.

Rising health care costs continue to be a major frustration for Americans. Nearly 60% of the country wants Congress to make lowering health prices the top priority. There are differing opinions about a solution: Some want bigger subsidies and more government spending, while others say the key is removing mandates and regulations to open the market. But almost every American agrees that one easy way to lower costs is for hospitals to disclose their prices before patients are treated.

The benefits are obvious. If patients know the prices, they can shop for non-emergency services like they do for cars, computers and clothes. Health providers will adjust costs to stay competitive and prices will become stable, affordable and consistent.

But some don’t like this arrangement. Namely, the hospitals. They want to hide prices so they can charge whatever they want, add fees for things you didn’t know were included or charge you a completely different price than other patients for the same service.

A GAO report from several years ago found that maternity care in Boston could range from around $6500 to more than $21,000. And a recent project from the health care startup Turquoise Health shows that a diagnostic colonoscopy in Texas averages $2,527 but can range from $148 to $15,789 — a startling 100x multiplication.

That’s why the Trump administration finalized a rule nearly two years ago that requires hospitals to provide clear, accessible pricing information and post five types of standard charges for items and services, including charges negotiated with insurance companies, in two formats online. Shifting power to patients forces hospitals and insurers out into the open where patients have the information they need to make the best decision for their family and finances.

The American Hospital Association immediately fought back and filed a legal challenge. Fortunately for patients, the AHA lost in court, the rule was upheld, and it went into effect on Jan. 1, 2021.

In the five months since it became law, the response from hospitals has been varied. Some have adhered completely and some partially. Some have not posted any charge information online, choosing instead to pay the paltry fine for non-compliance because the profits from hiding prices are too great.

The Biden administration’s Centers for Medicare and Medicaid Services has started sending letters to hospitals that are not in compliance, but the agency has also proposed removing price transparency provisions in a separate payment rule creating concern about the future status of the Hospital Price Transparency Rule. This uncertainty is where state legislatures can play a major role.

In Texas, lawmakers proposed a bill that codifies the CMS Hospital Price Transparency Rule into state law. As stated by the Texas Senate Research Center, “State codification of the rule will ensure that price transparency and consumer empowerment will continue in Texas even if the rule is repealed or changed at the federal level.”

Interestingly, the bill passed both chambers of the Texas legislature unanimously, underscoring the tremendous bipartisan support for hospital price transparency.

Unlike the federal rule, the Texas reform comes with real teeth. In addition to a steeper fine, hospitals could potentially lose their licenses if they do not comply.

We hope this sends a strong signal to the Biden administration to keep the rule in place, enforce it and even consider making it stronger. When an issue unites far-left Hollywood activists like actress Susan Sarandon with former senior Trump administration officials and conservative think tanks, CMS shouldn’t be so quick to dismiss.

But in the case that the administration waffles, other states should follow the Texas example of shifting the dynamic in health care with policy that empowers patients with more information and control over health care decisions. It will inevitably bring down costs and improve services as providers will have to be upfront and consistent with what they charge.

Texans and Americans across the country should be confident that their leaders will put them first by codifying hospital price transparency and can do so in a remarkably bipartisan manner.

Brooke L. Rollins is president and CEO of the America First Policy Institute. Kevin Roberts is CEO of the Texas Public Policy Foundation.

Kevin Roberts, Ph.D.

Brooke Rollins

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