Price transparency is the bipartisan solution to America’s health care cost crisis. The Patient Act of 2023 recently passed the U.S. House Energy and Commerce Committee by a vote of 49 to 0.
This bill can finally reveal actual hospital, health insurance, and prescription drug prices Americans need to substantially reduce their medical bills. All Americans and members of Congress should support it.
As I wrote in my latest bestseller “March to the Majority,” when we developed the Contract with America in 1994, we made sure each provision enjoyed at least 70% public support. Numerous polls show health care price transparency enjoys 90% support. This overwhelming, bipartisan backing is not a surprise.
Americans consult prices to inform their purchases of every other good and service. Only in health care are prices hidden.
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As a result, hospitals and health insurers have a blank check to charge patients essentially whatever they want. This causes health care costs to spiral. America now spends nearly 20% of its GDP on health care – almost two times the developed world average, with little difference in health care outcomes.
Price transparency empowers patients and other health care consumers, including employers and unions, to fight back against runaway medical bills and hold the health care industry accountable. When we can compare actual, upfront prices, including all negotiated rates between hospitals and insurers, we can spot wide price differences that can vary by 10 times or more for the same treatments. We can avoid price gouging in favor of affordable care.
For instance, a standard MRI ranges from a few hundred dollars to a few thousand dollars. When employers and unions can see such price fluctuations, they can choose the best value and share the savings with employees through lower premiums and higher wages. Patients can budget for care and have peace of mind that they won’t face financial ruin from unknown bills that arrive in the mail months later.
Transparent prices unleash competition among hospitals and health insurers, putting downward pressure on costs and spurring quality improvements. Consider the fair market prices available to consumers of laser eye or cosmetic surgery, which exist in a competitive corner of the health care system. Prices for these procedures have fallen, adjusted for inflation, in recent decades.
Americans already have the right to actual health care prices due to hospital and health insurance price transparency rules. They were finalized by the Trump administration and expanded by the Biden administration. These rules, which took effect in January 2021 and July 2022, respectively, require hospitals and health insurers to publish their discounted cash and negotiated health plan rates for care.
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Unfortunately, these rules have been marred by a lack of compliance and standards, making it difficult for ordinary consumers to compare and save. According to a recent study by PatientRightsAdvocate.org, only 24.5% of hospitals fully comply with all aspects of the rule.
The Patient Act can make price transparency a reality for American patients and consumers of health care. It enshrines the rules into law, making them more durable. It strengthens them by dramatically increasing the penalties for noncompliance.
It directs the Department of Health and Human Services to issue clear data disclosure standards, so tech innovators can easily aggregate prices in consumer-friendly web applications. And it eliminates a cost estimate loophole in the rule that hospitals have used to obscure real prices and prevent consumers from comparison shopping.
Only with full price transparency, including all negotiated plan rates and actual prices – not estimates – can consumers protect themselves from overbilling, choose care at fair-market rates, and benefit from competition. Congress should rally behind this bill as its health care reform vehicle.
No matter where you fall on the political spectrum, price transparency is a health care solution you can support. It is a market-based reform that empowers consumers to substantially reduce their health care costs and protects patients from price discrimination and outrageous medical bills.
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Gingrich 360 consults for several companies, including some in the health care industry which would be affected by the Patient Act of 2023. For more commentary from Newt Gingrich, visit Gingrich360.com.
