The White House issued an executive order on Monday that aims to force insurance companies, doctors and hospitals to give patients more information about their healthcare costs before they receive it.
Insurers and medical providers have long negotiated prices in private, and neither side wants competitors to know specifics about the deals they’ve made. As a result, there’s little transparency and patients have few options and little power.
The White House says that eliminating the element of secrecy could help lower patients costs and give some power back to them.
The order is part of President Trump’s attempts to bolster his reputation on the issue of healthcare. Recent polls have shown Trump is vulnerable on the issue, in no small part because of his repeated promises to repeal the Affordable Care Act.
How bad have things gotten?
According to one estimate from Pew Charitable Trusts, Americans spent $535 billion on prescription drug costs in 2018, a 50% increase since 2010.
The price of insulin rose by 99.2% from 2012 to 2016, according to the Health Care Cost Institute and drugmakers kicked off 2019 by raising the prices on more than 1,000 medications by an average of 6.3%. The opioid OxyContin, one of the most prescribed drugs in America, saw a 9.5% increase while blood-thinner Pradaxa shot up by 8%.
Indeed, Democrats have made lowering the cost of drugs and healthcare a priority and the House passed a series of bills in May to lower drug costs while also strengthening the Affordable Care Act. Most Republicans voted against the bill.
The Trump administration and Republicans have said they want to lower healthcare and drug costs, but they’ve yet to take meaningful legislative action to do so.
While the executive order is a small step forward in lowering consumer costs, it has no immediate impact. It doesn’t specify what information hospitals and insurers will have to provide, it simply directs the Health & Human Services Department to develop a rule to require greater transparency.
The details of the rule will be worked out during the regulatory process, according to the New York Times, though it’s unclear if the order will even get that far.
The Times reports that hospitals and insurers are sharply opposed to the executive order, argue that it could actually increase costs rather than reduce them, and are likely to take legal action to fight the changes.
Currently, hospitals must disclose what they charge, which represents the price they want to receive, but the new order asks for more transparency about the actual prices insurance companies have agreed to pay providers for care. Patients don’t usually pay that amount themselves, but as health plans with higher deductibles have become commonplace, patients are increasingly responsible for the negotiated prices until they meet their deductibles.
The executive order would try to prevent patients from receiving huge surprise bills by forcing providers and insurers to give them an estimate out of their out-of-pocket costs before they receive care.
A similar law is already on the books in Virginia, which states that upon request, every hospital shall provide a patient with an estimate of the payment amount for which the participant will be responsible.
Supporters of price transparency say it will increase pressure on health care providers to lower prices by giving patients the ability to shop around for a better price.
However, some experts say that the executive order doesn’t directly address the real problem: the high cost hospitals, doctors and drug makers charge for their services.
These experts contend that disclosing list prices doesn’t help most Americans since their rates are determined by their insurance providers and deductibles, meaning the list price may not be accurate for them and may even dissuade them from receiving care.