Payers must make public the individual amounts their health plans pay providers across all types of services and locations, including hospitals, doctors’ offices, imaging centers, outpatient surgery centers and urgent care clinics.
As we collectively celebrated our nation’s independence in July, Americans had even more reason to rejoice. Another revolutionary milestone had occurred just days before our country’s birthday, one that promises to release us from the tyranny of hidden health care prices that have oppressed our compatriots for far too long.
Just as the colonists fought against paying high taxes to Great Britain without having a say in how the money was spent, health care consumers have been fomenting their own uprising against hospitals and insurance plans. They are tired of the surprise bills and price gouging. They are tired of not knowing up front what their health care is going to cost. They are tired of escalating premiums and of not having control of their health care dollars. Like the colonists before they broke free from Britain, Americans today are again being exploited and overcharged, this time by a health care system that has profited excessively by keeping prices and patients in the dark.
Thankfully, a landmark federal rule that went into effect July 1 could change that. To paraphrase Paul Revere, “The prices are coming! The prices are coming!” The Transparency in Coverage Rule requires health care payers (insurers and self-insured group health plans) to unveil all their previously secret prices negotiated with in-network providers. Now payers must make public the individual amounts their health plans pay providers across all types of services and locations, including hospitals, doctors’ offices, imaging centers, outpatient surgery centers and urgent care clinics.
This is critical for the millions of Americans who get their health insurance through their employers and whose average annual family health care premium rose to $22,221 in 2021, 61% more than in 2010, according to the Kaiser Family Foundation. These plans often include higher deductibles and copays, adding thousands of dollars in expenses. These outrageous costs are partly to blame for the
100 million Americans owing medical debt, and the nearly two-thirds of Americans who avoided necessary medical care last year.
The new insurance rule complements the Hospital Price Transparency Rule, which took effect in January 2021, requiring hospitals to post all their prices by payer and plan, as well as their discounted cash prices. Together, the two rules, once fully implemented and enforced, will deliver systemwide health care price transparency.
Why is this so revolutionary? This public posting of negotiated rates will give all purchasers of health care — patients, workers, employers, unions and taxpayers — a window into what their insurance premiums are buying. They will see when their plan’s negotiated rates are higher than those of other plans, or more than the discounted cash prices for those without insurance. The ability to see payers’ negotiated rates alongside hospital charges will help patients choose lower-cost providers and higher-value plans, while giving them unprecedented price certainty and more control of their health care spending.
They will be able to see, for instance, that prices vary as much as 10 times for the same services. Data will show that an MRI at one facility costs $350 whereas the same scan at a nearby imaging center costs $3,500, and that a cesarean section could cost $6,000 or $60,000 at the same hospital depending on the plan, with no difference in quality.
Moreover, once prices are unleashed, individuals will be able to shop for health care the way they do for every other product or service, such as cars, appliances, airline tickets or groceries. Price competition will kick in, transforming our dysfunctional, overpriced, opaque health care system into a functioning free market, which will drive the cost of care and coverage down and access up.
The new data will help employers choose the health care plans with the best negotiated rates, basing their decisions on real value. Employers will be able to compare payer networks and plans and make decisions that could lower their health care costs by as much as 40%. The savings could go toward more jobs or higher wages, while providing a buffer against inflation.
All of this will not happen immediately. The newly available data files from insurers are largely incomprehensible, but outside technology companies will soon aggregate the machine-readable files and make sense of them. They will develop online tools that will make accessing and navigating health care prices much easier. These tools will do for health care what Zillow has done for real estate and Kayak for air travel, aggregating and organizing data for easy searching.
As with the American Revolution, victory will not happen overnight. Britain did not give up without a fight, and neither will hospitals and insurers, which profit from keeping patients blinded to price. Both hospital groups and insurers have sued the government to block the rules, and lost. Sadly, since the hospital transparency rule took effect 18 months ago, only 14.3% of hospitals reviewed in a random study were fully complying with the rule and properly posting prices, according to a widely cited report. This widespread noncompliance is largely due to the lack of government enforcement; to date, only two of the hundreds of noncompliant hospitals have been fined.
Instead, many hospitals have tried to skirt the requirements by not only making prices difficult to access, but also by arguing that patients only care about their out-of-pocket costs, not total prices. But total prices do matter because we all pay for health care through higher premiums, higher copays, higher deductibles, higher costs of goods and services and higher taxes.
But maybe not for long. Independence Day serves as a reminder that when oppressed citizens join forces and say enough is enough, freedom from tyranny and victory are not far behind.
Marni Jameson Carey is president of Power to the Patients, a national nonprofit working to make sure Americans realize their right to know the price of their health care upfront.