It’s been more than three months since the federal government ordered hospitals to make like the rest of the economy and start publishing their prices. But nearly two-thirds of the country’s largest hospitals are refusing to do so, according to Health Affairs analysis.
That’s absurd. Price transparency is fundamental to the efficient operation of markets. And it has the potential to save patients billions of dollars each year. It’s long past time for healthcare providers to be transparent about what they charge.
Historically, prices for healthcare have varied by an average of nearly 300% across the country. A simple blood test could cost $18 in Ohio or $443 in Texas. The Trump administration tried to bring some sense to the healthcare market by promulgating a rule requiring hospitals to publish an easy-to-read list of 300 services, such as X-rays and knee replacements, alongside projected minimum and maximum costs. That rule went into effect on Jan. 1.
But many hospitals have ignored the rule, blaming the COVID-19 pandemic as the reason they’re unable to comply.
It’s not a good excuse. The rule was finalized back in 2019. Hospitals have had over 13 months to prepare for its implementation. Some hospitals claim the cost of complying with the rule is too high. The Centers for Medicare and Medicaid Services estimates that it would cost roughly $12,000 per hospital in the first year and $3,600 for every year after that. Providers argue that the true cost could be hundreds of thousands of dollars.
Regardless, the potential savings for patients are in the billions of dollars. Research from the RAND Corporation estimates that improving price transparency could reduce health spending by up to $27 billion each and every year. In every other sector of our economy, transparent prices help consumers make smart spending decisions. The healthcare sector should not be any different.
Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in health care policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.