Chris Jacobs on March 8, 2022
For conservatives, recent developments when it comes to hospital transparency may not come as a shock. The Trump administration tried its best to create a market-based approach to reforming health care and neglect by the Biden administration means those reforms aren’t having their full impact — paving the way for Democrats to propose yet more big-government alternatives.
A series of investigations and reports over the past year-plus, as the Daily Caller News Foundation summarized in January, have found that many hospitals continue to ignore their requirements under the law to provide patients with price information. Properly equipped with this data, consumers could serve as smart shoppers for (non-emergency) health care, such as elective surgeries like knee or hip replacements.
Hospitals want to keep this information secret, preserving their ability to maximize charges and profits. But if they persist in their anti-competitive and anti-consumer tactics, they may find that the Left will impose a further “solution” they like even less — an expansion of government price controls.
Trump’s Regulatory Efforts
Paradoxical as it sounds, the Trump administration’s consumer-oriented reforms stem from a provision in Obamacare, the law that Republicans could not repeal in 2017. One section of Obamacare added Section 2719(e) of the Public Health Service Act, which required hospitals to “establish (and update) and make public … a list of the hospital’s standard charges for items and services.”
The Trump administration used this language to promulgate a series of regulations fleshing out the statutory requirement. One of these rules required hospitals to start publishing price information publicly, effective Jan. 1, 2021.
Hospitals Falling Short
But many hospitals still have yet to comply fully with these requirements. For instance, one study published in December concluded that as of June 1, 2021, (i.e., five months after the Jan. 1, 2021 deadline), more than half of short-term acute-care hospitals still had not posted their prices in the machine-readable format required by the regulations.
Some hospitals may try to blame the lingering effects of the COVID-19 pandemic and short staffing as a reason for why they have yet to fulfill their legal requirements. But in some cases, hospitals have shown a deliberate desire to obfuscate.
A March 2021 Wall Street Journal investigation found that, while some hospitals had published their pricing data, they had also taken actions to prevent search engines like Google from locating their databases. In other words, even when hospitals “published” their data, they wanted to make their “public” databases hidden from most consumers, such that only the most determined or knowledgeable people could access this information.
Why It Matters
The import of hospitals’ failure to comply with these requirements should be obvious to anyone entering a supermarket, department store, or any other retail establishment. Few consumers would shop at a grocery store that didn’t make its prices public — so why should the public consume (far more costly) health care services from hospitals that don’t tell people what care will cost until weeks or months after the fact?
Consider some of the positive outcomes that can arise once hospitals make all their pricing information public:
- Uninsured individuals and people paying cash will have more information to request discounts at hospitals, by knowing the market rate for services in a given area.
- Insurers can demand that the most expensive hospital(s) in an area lower their prices.
- Insurers can also offer incentives to direct consumers to the most effective/lowest prices hospitals in their area. For instance, they could cap their exposure for a “shoppable” service (e.g., a colonoscopy) at a specific amount (e.g., $1,000). If a patient wanted to obtain the service from a more expensive hospital, they could do so, but they would have to pay for the full cost of the service above this reference price. Insurers could go further, and offer to split any savings below that amount directly with consumers.
All of these scenarios would work to lower prices for consumers, lower premiums for people buying insurance and reduce health care costs overall. All of which might explain why the hospital industry continues to “slow-walk” implementation of regulations that could harm its proverbial gravy train and reduce its pricing power.
Democrats’ Alternative: Socialized Medicine
By the same token, hospitals should be careful what they wish for, because they just might get it. If the market-based approach promoted by the Trump administration in the form of price transparency doesn’t help to stem rising health care costs, Democrats always have another blunt instrument they can turn to: Government price controls.
At present, Democrats are still trying to resurrect reconciliation legislation that would require Medicare to “negotiate”— more like dictate prices for — prescription drugs. And a majority of House Democrats have endorsed single-payer legislation that would give the federal government the authority to dictate the prices of just about every good and service provided throughout the entire $4 trillion health care sector.
From the gas shortages of the 1970s to the queues outside Soviet-era markets, price controls have failed in just about every venue in which governments have imposed them. They would have a harmful effect on the American healthcare system, as the Congressional Budget Office concluded that a single-payer system of socialized medicine would result in rationed health care in every circumstance CBO analyzed.
Hospitals should get with the times, and move their industry into the 20th century by posting their prices publicly — just as practically every other industry has done for the last 100-plus years. If they do not, they — and we — could find themselves facing a far worse alternative sooner than they think.
Mr. Jacobs is Founder and CEO of Juniper Research Group, and author of the book “The Case Against Single Payer.” He is on Twitter: @chrisjacobsHC.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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