June 25, 2019

Trump: Make Medical Costs Transparent

His executive order isn’t perfect, but the health care system is seriously broken.

For the last several decades, insurance companies and hospitals have colluded to make the cost of health care as opaque as possible. Have you ever tried to ask a provider — even the person who works the billing desk — how much a service will cost before obtaining that service? The response ranges from being politely told to wait for the insurance filing to personal offense for having the temerity to ask such a question.

And then there’s finding out after filing an insurance claim that the service would have been significantly cheaper without insurance if you’d only known to ask for the cash price. (True story for this author.)

Economist Stephen Moore observes, “Health care is one of the most expensive items we buy each year, and yet most Americans haven’t a clue what all of this costs.” Even worse, as our Louis DeBroux noted last week, “Pricing [can be] significantly higher for the same service depending on the insurer, group plan, geographical location, etc.” When patients can’t see that pricing, they have no idea when they’re being fleeced.

President Donald Trump took a step to address this huge problem with an executive order he signed Monday. The order — which won’t take effect until after a period of public comment and rule finalization — will require hospitals to clearly disclose the cost of care for both the insurer and the patient. “This is a truly big action,” Trump said. “Some people say bigger than health care itself.” He added, “No Americans should be blindsided by bills they never agreed to.”

As is his wont, Trump is overselling his action a bit. As Moore put it, “This action by the White House treats symptoms — not the disease of third-party payers for health care.” Moreover, given that there are almost no specifics in the order, The New York Times is correct to note, “Hospitals and insurance companies are likely to lobby to make any disclosures as general as possible.”

Former Republican Rep. Ernest Istook, who now runs Americans for Less Regulation, argues that Trump’s order is the wrong prescription because “the infrastructure and paperwork to implement this will become a new Washington swamp.” Given the 1,000 health insurance companies nationwide and the millions of providers and pricing agreements, Istook says the resulting “nightmare of red tape could put Obamacare to shame.”

Concerns about the federal government “fixing” what it broke in the first place are valid. After all, ObamaCare merely forced everyone to participate in the broken system.

Yet we can only hope to fix a horribly broken health system by introducing free-market transparency — consumers of health services must know how much those services will cost. Choice and competition will better serve everyone, and, concerns notwithstanding, Trump’s order is a step in the right direction. Some regulation is necessary if consumers have no recourse but to be swindled by the colluding providers and insurers who offer outlandishly overpriced “care.”

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