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Hospital price transparency won’t make health care affordable

Written by Diane Archer

In our Kafkaesque healthcare system, people are told to make an “informed choice” of health insurance when not even the prices private health insurers pay hospitals are transparent. Beginning in January 2021, hospitals might be required to disclose publicly the prices they charge private health insurers, but that won’t make health care affordable or help people make a meaningful choice of health insurance. In sharp contrast, Medicare’s rates have always been publicly available; more important, costs are predictable and you can get the care you want.

For decades, working-age Americans have had to choose almost blindly among health insurers, not having a clue as to what their copays would be if they needed complex care. Most people have relied on premium differences and provider network differences to make their choice. But, knowing that will not tell you your out-of-pocket costs if you develop a costly condition because hospitals charge private health insurers wildly different prices for people’s care.

Most people do not realize that the differences in prices insurers pay could mean huge differences in their out-of-pocket costs if they need hospital care. Regardless, they have had no ability to see these prices. Until, perhaps, now. While hospital price transparency would be a step forward, it is not nearly enough to protect working people against high out-of-pocket costs. Unlike traditional Medicare, private insurers do not allow people to protect themselves against unpredictable costs with supplemental coverage.

The US Department of Health and Human Services (HHS) is requiring hospitals to disclose their negotiated prices with insurers effective January 1, 2021. The American Hospital Association is fighting back, claiming that this requirement would violate hospitals’ First Amendment rights. As of now, the AHA is losing its lawsuit to keep hospital prices secret. The Judge in the case does not buy the First Amendment argument. Rather, he believes that disclosing hospital prices would empower patients to compare hospital prices.

It’s not clear what good it would do patients to be able to compare prices. Hospital prices should be the same for everyone, much like restaurant prices and television prices. And, they should be reasonable. They should not be based on the hospital’s negotiating leverage with insurers, as they are today, which can drive prices through the roof. And, they should be public.

But, disclosing prices will not rationalize them. For that, we need Medicare for All, which would ensure fair prices and guarantee everyone access to care with no out-of-pocket costs. At the very least, we need all-payer rate setting, with the government using the collective leverage of all Americans to negotiate the rates.

Disclosing hospital prices might help people avoid some exorbitant health care charges. But, it will not help nearly as much as traditional Medicare helps, or Medicare for All, which has no copays. People have no control over how many doctors see them in the hospital or how many tests and procedures they receive. So, a hospital with higher prices could have lower total costs if it performs fewer procedures. There’s no way anyone could know that in advance.

It’s time the federal government stopped proposing small bore fixes to out-of-control health care prices. Americans do not have choice when it comes to health care. It’s unaffordable. People face huge financial barriers to care. It is untenable and unconscionable. We need Medicare for All.

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