The shocking reason hospitals keep their prices a secret from you

May 23, 2020 stgblase

By Brian Blase

Congress has provided hospitals with nearly $200 billion of our hard-earned tax dollars to help them weather the coronavirus pandemic. House Democrats just passed a bill adding another $100 billion. Now it’s time to stop bailing out hospitals and start helping financially stressed families get better health care at lower costs.

In health care, most prices are hidden. Earlier this month, big, profitable hospital systems were in court to make sure that American patients remain in the dark, challenging a Trump administration rule that would require them to publicize prices, including those negotiated with insurance companies.

No other industry is fighting to hide prices from consumers. When given pricing information, people know how to shop for value. With websites like Amazon and Kayak, Americans use price information to secure the best deals. This forces providers to compete by lowering prices and improving quality. Health-care markets don’t work like this.

Imagine going to the grocery store to buy milk, bread and butter, but without any prices. You check out and the grocer tells you that your bill will come in a few weeks. In about a month, you get both an explanation of grocery benefits from your insurer and a bill from the grocer for $150.

You know this can’t be right — a gallon of milk, a loaf of bread and a pack of butter can’t cost this much. You call your insurer, and they ask what you are complaining about. Without their discount, you would have paid $250. They saved you $100!

Sounds crazy, but this is how we pay for most of our health care. It’s actually worse because of huge price variation across insurers. The parallel would be if two other people purchase those same goods and one of them is charged $50 and the other is charged $400.

A lack of price information has led both insurers and hospitals to become lazy and inefficient. They can deliver mediocre or even poor care at high cost and still see their bottom lines improve. Counter to common perception, health insurers aren’t interested in lower health-care costs since they gain more revenue from higher spending. Insurers pass the higher costs to employers and employees through higher premiums while they tell us what a great “discount” we received.

The Trump administration rule would also require hospitals to post prices for at least 300 shoppable services on their websites in a consumer-friendly way. With this information, consumers and employers would force insurers, hospitals and health-care providers to compete by lowering costs and improving value. By lowering what Americans spend on health care, it will leave families with more income to save for their retirement, help pay for their kids’ education, or take a family vacation. Now, more than ever, Americans have a greater incentive to make smart health care choices, as high deductible plans and health savings accounts are both growing.

The hospitals claim the Trump administration exceeded its authority in issuing its price transparency rule. We don’t know if that’s true, but there’s a simple fix. Congress can pass this action and ensure that Americans have access to real prices in health care.

This is especially important now as the economic recession pinches family budgets across the country. Congress has already taken care of hospitals. Now it should help patients by giving them the control and information they need to be effective health-care shoppers.

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