In late June, President Trump signed an executive order that aims to make healthcare prices more transparent.
The order calls on the Secretary of Health and Human Services to propose rules that would require hospitals to publicly post standard prices for medical care in an “easy-to-understand, consumer-friendly” format that will “allow patients to compare prices across hospitals.” It also aims to ensure that doctors, hospitals, and insurance companies “provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care.”
This is a worthwhile effort. When patients can easily access the price of healthcare, costs tend to go down.
Consider the evidence from New Hampshire, where state officials launched a website in 2007 that allows consumers to compare health costs. University of Michigan researchers recently analyzed how this affected prices for medical imaging procedures, such as MRIs, CT scans, and X-rays, by looking at data from 2005 to 2011.
They found that, by 2011, the website helped lower out-of-pocket costs by 11%. All told, individuals saved approximately $7.9 million, and insurers saved $36 million in the five years after the site went live.
Or take an analysis from the University of Notre Dame, which found that customers who search for prices can save 10% to 17% on care. Another report from Yale University revealed that customers are likely to pick cheaper healthcare options when they receive cost information in a clear way.
Plenty of Americans have benefited when they’ve had the chance to shop around for care. In one survey of more than 2,000 adults, more than 6 in 10 who compared prices among multiple providers reported saving money. Patients’ wallets will benefit from more competition. The president’s efforts to boost price transparency can help provide just that.