The Trump administration continued to nibble away Monday at the problem of high healthcare costs, unveiling a set of proposals to bring more transparency to the industry’s byzantine pricing practices. But like just about everything else the administration has done on healthcare affordability, the proposal would strike at best a glancing blow to rising costs. And paradoxically, it could wind up raising prices for some patients.
It’s hard to argue with the idea that people should know how much their care will cost before they receive it, not after. The White House proposal would address that directly, administration officials said, by requiring insurers and healthcare providers to tell patients in advance what their out-of-pocket costs would be.
The initiative’s main effort to hold down healthcare costs, though, would be to require hospitals to clearly and publicly disclose how much people actually pay for services there. In theory, people seeking non-urgent care — a knee replacement, say — could use the information to shop around for the most affordable hospital, promoting the kind of competition that drives down prices in normal markets.
It’s not at all clear how helpful the information will be, however, in part because the proposal doesn’t specify how much detail hospitals would have to release about their prices. The less detailed the hospitals’ price lists are, the less help they give consumers to shop around. But the more detailed they are about the prices negotiated with insurers, the greater the risk that hospitals will discover when they’re charging less than their competitors and raise their prices accordingly.
Beyond that, Americans pay a relatively small percentage of their healthcare costs out of pocket, even with steadily increasing deductibles. They typically depend on their doctors to tell them exactly what care they need. What’s more, if they’re seriously injured or ill, they may be in no position to look around for care. And in many communities, there aren’t enough hospitals or physician groups to support real competition. All of these factors shield the healthcare industry from the sort of consumer pressure and market forces that the Trump administration wants to unleash.
Making a major dent in healthcare costs would require the administration to take a much bigger swing at the way healthcare is delivered and paid for in the United States. Why do we spend so much more than the residents of other countries do, even though the care doesn’t yield consistently better outcomes? It’s not because prices are hidden. The president’s proposal may prove helpful, but only on the margins.
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