Trump’s team delivers a big win for patients by making health costs clearer

By | November 16, 2019

When it comes to improving the nation’s healthcare system, the Trump administration continues to do administratively some of the good things it hasn’t been able to do legislatively.

On Friday, it took two major steps toward transparency in pricing and options. Patients will now better understand what their choices and costs will be. The president and his team deserve credit for their efforts.

Specifically, the administration formally proposed one new rule (not yet “final” in the administrative process) and finalized another. The first, the Transparency in Coverage rule, would require health plans to provide real-time, online information including an “estimate of their cost-sharing liability for all covered healthcare items and services” in order to “empower consumers to shop and compare costs between specific providers before receiving care.”

Also, health plans would “disclose on a public website their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers. Making this information available to the public is intended to drive innovation, support informed, price-conscious decision-making, and promote competition in the healthcare industry.”

The second rule, finalized on Friday, has an unwieldy 22-word title, but its upshot is that hospitals now must “provide patients with clear, accessible information about their ‘standard charges’ for the items and services they provide.” The information “must include additional information such as common billing or accounting codes used by the hospital … and a description of the item or service to provide common elements for consumers to compare standard charges from hospital to hospital.”

To be sure, details matter, and one can only help the new rules provide enough guidance and assistance to insurers and hospitals for them to easily comply. Still, these efforts are tremendously important, for individual patients and systemic improvements and, eventually, a reduction in healthcare price inflation.

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Just about every person in the U.S. has had an experience of confusion, frustration, anger, and sometimes severe financial distress due to the bureaucracy and sheer obscurity of healthcare pricing. Make a visit to the emergency room, for example, and for months you’ll be receiving unexpected bills from the providers of each aspect of your care, without you having any sense of whether each bill is all or just part of your costs.

Conservatives long have said that free-market forces should provide the cure for the flaws and hyperinflation in our healthcare system. Market forces can’t work, however, if pricing is opaque. Consumers can’t affect the market through millions of individual decisions if they have no information on which to base those decisions. With these two rules, the Trump administration is trying to provide the price signals and other information necessary for patients to be informed and thus to act as rational consumers.

As they do, not only will each individual benefit from more real choice and surer understanding of how the billing system will affect them, but the whole system should benefit from the downward pressure on prices that comes from millions of people making real choices with calculable results.

So, again, kudos to the Trump team. With these rules, the healthcare system itself is getting healthier.