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Healthcare

Hospitals Sue to Keep Healthcare Prices Secret

After Trump moved to help consumers, the healthcare cartel responded with a lawsuit.

Arnold Ahlert · Dec. 9, 2019

Of all the insults to their collective intelligence and dignity Americans put up with, perhaps none is more infuriating than the quintessential Q&A that makes an utter mockery of the healthcare industry’s consumer-provider relationship. Question: How much does this procedure cost? Answer: What insurance do you have?

Applying the same “standard” to any other consumer-provider transaction reveals its bankruptcy. How much is that loaf of bread? What will it cost me to fix my car? To apply progressive-speak to the equation, what the healthcare industry wholly embraces is price “fluidity” more familiarly known as “why should you care, your insurance company is footing most of the bill?”

How about because the United States spends more per capita on healthcare than any other nation in the world by a considerable margin?

Think price transparency would help? The Trump administration does. On Nov. 15, 2019, it announced that it would begin requiring hospitals to publicly disclose the discounted prices they negotiate with insurance companies. The rule would kick in beginning in 2021, as part of an administration effort to make the entire healthcare market more transparent. In addition, the administration is also proposing a rule that would require insurers to provide patients with advanced estimates of their out-of-pocket costs before they see a doctor or go to the hospital.

“For decades, hospitals, insurance companies, lobbyists and special interests have hidden prices from consumers, so they could drive up costs for you, and you had no idea what was happening,” President Trump stated that afternoon. “You’d get bills that were unbelievable and you’d have no idea why.”

Patients, he added, have “been ripped off for years.”

The reaction by a representative of the rip-off artists? “This is a very radical proposal,” said Tom Nickels, an executive vice president with the American Hospital Association, an industry trade group. Why? Because it would reveal industry “trade secrets,” as in which insurance companies, a.k.a. the middlemen, get preferential deals that other insurance companies — and patients themselves — don’t get.

Subsequently, a joint statement issued by the American Hospital Association, the Association of American Medical Colleges, the Children’s Hospital Association, and the Federation of American Hospitals revealed the just how far the rest of the rip-off artists were willing to go in their attempt to bamboozle the public:

Today’s rule mandating the public disclosure of privately negotiated rates between commercial health insurance companies and hospitals is a setback in efforts to provide patients with the most relevant information they need to make informed decisions about their care. Instead of helping patients know their out-of-pocket costs, this rule will introduce widespread confusion, [and] accelerate anticompetitive behavior among health insurers…

Got that? Price transparency will not only confuse the public, it’s anti-competitive.

Thus, it must be prevented. “The nation’s hospital groups sued the Trump administration on Wednesday over a new federal rule that would require them to disclose the discounted prices they give insurers for all sorts of procedures,” The New York Times reported last week. In the suit itself the plaintiffs insist there is “no actual statutory basis” for the requirement.

“America’s hospitals and health systems are committed to providing patients with the financial information they need to make informed decisions about their health care,” the suit adds. “That is the out-of-pocket amounts patients will be expected to pay for that care, recognizing that each patient’s circumstances will be differently affected by numerous variables in their health insurance coverage.”

That first sentence is an outright lie, because if it weren’t, they wouldn’t be suing in the first place. Moreover, what could be more germane to making informed decisions than knowing what something costs? And why should there be different prices for the same procedures, other than to accommodate the aforementioned middleman?

Because protecting the provider-middleman relationship is their highest priority.

Forbes Magazine Senior Contributor Adam Andrzejewski illuminates why. An oversight report of the industry reveals that so-called “nonprofit” hospitals are raking Americans over the coals.

“We found that these hospitals add billions of dollars annually to their bottom line, lavishly compensate their CEOs, and spend millions of dollars, which are generated by patient fees, lobbying government to defend the status quo,” Andrzejewski reveals. “Last year, patients spent 1 out of every 7 U.S. healthcare dollars within these powerful networks.”

On what? “Collectively, $297.5 million in cash compensation flowed to the top paid executive at each of the 82 hospitals,” Andrzejewski adds. “We found payouts as high as $10 million, $18 million and even $21.6 million per CEO or other top-paid employee.”

It gets worse. Even after these exorbitant payouts, these “nonprofits” increased their collective bottom lines by nearly $40 billion between 2017 and 2018, from $164.1 billion to $203.2 billion. That represents a 23.6% growth, year-over-year, in net assets.

Equally revealing, these 82 hospitals spent $26.4 million on lobbying to maintain that contemptible status quo — one that has seen healthcare costs rise from 7% of GDP in 1970 to an estimated 20% of GDP today.

Incredibly, the suit not only alleges that the requirement to provide price transparency runs afoul of First Amendment protections “because it mandates speech in a manner that fails to directly advance a substantial government interest,” it asserts that providing the consumer with gross charges, payer-specific rates, minimum and maximum negotiated charges, and the amount the hospital is willing to accept in cash from a patient would create a file so large it “could easily crash most standard computer systems, and some members worry about the ability of their websites to function at all with such a large file.”

As columnist Don Surber wryly notes, the cafeterias in those same hospitals are required to disclose how many calories are contained in a meal, even as the prices of services critical to patient needs must remain a secret.

He also explains the real motive behind this lawsuit, writing, “These hospital oligarchs fear a price war fueled by posting prices will cut into that $40 billion a year in profits they make.”

What would that precipitate? “Once informed consumers correct the market by exercising free choice and stimulating competition, health-care prices will go down to where they belong,” asserts Marni Jameson Carey, executive director of the Association of Independent Doctors.

Moreover, decreasing healthcare costs will also precipitate a ripple effect. “As employers’ health-care costs go down, so will the costs of goods and services,” Carey adds. “Going out to dinner will cost less. That 6 to 8 percent a year increase in health premiums employers have been shelling out can start going toward raises and to more jobs. And maybe instead of spending one of every five dollars we earn on health care, we can spend more like one in ten.”

The suit was filed at the U.S. District Court for the District of Columbia. Here’s hoping the Court recognizes that price transparency, and the cost-reducing competition it would engender, is more important than the preservation of a self-serving, de facto cartel.

The health of millions of Americans — both physical and financial — depends on it.

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