Many of our “systems,” from education to prison to health care, are getting a long overdue reevaluation due to the COVID pandemic. This is a silver lining in some ways. We should reevaluate “how we’ve always done things” to make sure we are using the best policies for everyone.
One very strange aspect of our healthcare system is the lack of transparent pricing. Many Americans are now asking: Why? Why should we be expected to consume healthcare treatments and services, most of which are not emergent, without some upfront information about what we should expect to pay?
Fortunately, there’s now a legislative effort in both houses of Congress – the Health Care PRICE Transparency Act – to make healthcare prices available to patients.
Price transparency in health care isn’t just an end in itself. It’s the means to an end: a better healthcare system with more patient control (the ability to shop and hold providers accountable based on value), more financial certainty (so we can plan ahead without being shocked by five-figure surprise bills) and perhaps most importantly, lower healthcare expenses for American households.
One reason our healthcare system lacks choice today is that patients aren’t really in charge. But they want to be. Polling shows that more than half of Americans have tried to get pricing information in health care, and among those who have been successful at getting and comparing pricing information, 80 percent say they’d do so again.
Some people mistakenly believe that health care is too different from other markets for people to really “shop” for it. It’s true: health care is special. It’s life or death! And there are occasions where patients are incapacitated or care is needed so urgently that shopping based on price doesn’t make any sense. But less than 10 percent of healthcare spending goes toward emergency care. As the pandemic has shown us, most healthcare spending can be delayed or scheduled ahead of time. That gives patients time to compare prices and make a decision based on value.
Can you imagine getting treated for care you thought was covered, only to get a surprise bill later? Fifty-seven percent of Americans don’t have to use their imaginations on this one. It’s been their reality.
Price transparency would ensure that patients have the financial certainty of knowing what to expect when they consume health care. We receive an “explanation of benefits” after the fact telling us what prices were ultimately paid for our care. Shouldn’t we have access to that information ahead of time?
Affordability and Accountability
Perhaps most importantly, price transparency would lead to lower spending on healthcare for Americans. Becker Hospital Review shows that the average American family spends $28,000 per year on health care and insurance coverage.
Economists like Art Laffer, Larry Van Horn, and Steve Forbes all agree that price transparency could lead to reductions in healthcare expenditures by as much as 40 percent. That’s $11,000 per family per year! People like to say that sunlight is the best disinfectant… turns out it’s a pretty good way to make healthcare affordable, too.
Speaking of accountability… now would be a great time for it in health care. Like every industry, hospitals have been impacted by COVID-19, and not in a way that’s good for their bottom line. Patients might understandably fear that hospitals, desperate to make up for lost revenues, would charge even higher prices now. That’s why transparent pricing is needed now more than ever. It would go a long way to restore trust when public trust is very low.
Price transparency is long overdue. But as lawmakers consider the best ways to revive and stimulate the American economy, they should consider the various ways price transparency will benefit patients, and our pocketbooks!