A new plan brings clarity to healthcare pricing transparency—finally

In health policy, there is no such thing as opaque as pricing transparency. Insurance companies and hospitals tend to say that there is no place for it in the healthcare sector, because medicine is more complex than cars or groceries.

Other skeptics say that transparency rules are too difficult to enforce. Hospitals have He was greatly derided The two-year-old Trump administration directed that they post their prices online. Analyzing pricing information for those who complied seemed to be beyond the skill set of most average consumers.

But the real problem is that consumers are still not incentivized to take advantage of the ability to shop for the best value that price transparency can offer. Policymakers could change that by making some tweaks to the design of a standard health insurance policy—and by inviting consumers to share whatever savings they insure.

There is no denying that healthcare costs are out of control. Total national health expenditures amounted to more than $4.1 trillion in 2020, up from $3.8 trillion In 2019. The price of hospital services increased 200% over the past twenty years.

Health care has become very expensive Four out of every 10 Americans He told Gallup that they gave up some type of Medicare in order to save money.

Health care is expensive because prices are cut off from market forces. Insurance companies negotiate with service providers to determine how much they will pay for a particular service. Patients may be responsible for the first few thousand dollars in health care expenses through a deductible. But without access to transparent pricing, it’s hard to compare and shop. It may be restricted to a specific network of covered providers, even if those providers are not the lowest cost or best quality.

Jonathan Wolfson and Josh Archambault of the Cicero Institute suggest fixing this Model legislation They call it the Patient Right to Savings Act. Their plan has three steps.

First, it would require hospitals to publish a cash price for their services, not nebulous codes or what insurance companies pay. This will allow patients to truly compare prices and shop for the one that best meets their needs, as they would in any other marketplace.

It may also encourage hospitals with lower prices or higher-than-average quality to advertise their competitive advantage—a move that could inspire competitors to lower their own prices or make their own quality improvements.

Second, the plan requires insurers to count payments to out-of-network providers against a patient discount if those payments are less than the lowest in-network rate. This provision would encourage patients to look beyond their network of providers for high-value care.

Finally, the plan will instruct insurers to share any savings the patient insures after deducting it. Under this provision of the plan, patients could keep half of the difference between the cash price for care and the lowest in-network rate; Their insurance company will keep the other half. It’s a win for the patient and the insurance company.

There are a number of downstream benefits to a plan like this. As competition drives health care providers’ prices, insurers will be able to lower their prices — thus making coverage more affordable. Small businesses may be able to offer their workers more generous plans without spending more on coverage.

And having an army of patients shopping for care could lead to healthcare resources being allocated more efficiently, as providers and consumers balance their preferences for price, quality, and convenience.

Ideas like these can reinvigorate the free-market healthcare reform conversation. Days after the 2022 midterm elections, Axios announce that Republicans were “willing to take power without a health care agenda”.

A plan that puts price transparency into practice, and clearly demonstrates the value of market competition, deserves serious consideration by the GOP. It could also tone down progressive claims that more government — or even Medicare for All — is the only way to fix American health care.

By enhancing competition, price transparency has delivered higher quality, lower prices and better value in nearly every sector of our economy. Health care has been an exception for decades—thanks in large part to government policies that discourage price transparency. Ideas like the Patient Right to Savings Act could inject some much-needed consumerism into health care — to the benefit of patients, insurers, and providers alike.

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