Transparent Health Care Pricing
Even though President Donald Trump has issued directives to make hospital prices more transparent twice now, there are no tools to make it easy for patients to compare prices of an MRI, for example.
This is more than a casual observation, as noted in a March 19 article in Health Affairs.
“Although hospitals and health plans have posted a massive amount of health care price data, actionable information on prices is still not readily and widely available, partly due to ongoing issues with the usability and quality of the data,” wrote Stacy Pogue.
Hospitals were supposed to post prices by January 2021, with health plans doing so 18 months later. Hospitals sued to block the transparency rules but were unsuccessful. Four years out, you have to wonder whether the data problems are intentional.
Transparency Spelled Out
During his first term, Trump created rules that required hospitals and health plans to post prices in both a user-friendly format for consumers and a “machine-readable format (MRF)” for researchers and content creators to create apps and tools for patients and others trying to make price decisions.
On February 25, Trump introduced the “Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information” executive order (EO), which does primarily three things.
The EO requires the disclosure of “actual prices of items and services, not estimates; the issue of “updated guidance or proposed regulatory action” to make sure prices are “standardized and easily comparable across hospitals and health plans,” and updating of enforcement policies to ensure hospitals are compliant in “transparent reporting of complete, accurate, and meaningful data.”
Biden Administration Punted
Enforcement of the transparency rules during the Biden administration got off to a slow start, making real transparency a significant problem. The price data posted by hospitals is still not usable. The February 25 EO was written to address those lapses, notes Health Affairs.
“A 2024 Government Accountability report found that hospital data quality issues have prevented large-scale, systematic use of the data, though analysts anticipated some improvements in light of new CMS requirements for more standardized reporting formats and additional data elements phased in on July 1, 2024, and January 1, 2025,” wrote Pogue.
Pogue further wrote, “Furthermore, based on a data audit of a sample of hospitals, the Department of Health and Human Services Office of Inspector General estimated that 46 percent of hospitals were not fully compliant with requirements for MRFs, consumer-friendly shoppable service displays, or both.”
Insurers Floundered
Health plan compliance on health care pricing has also been slow. Problems with data have made it almost impossible to use. It is even more logical that my health plan could help me find the cheapest vendors they reimburse. However, it does not.
The Health Affairs article reports MRFs are full of duplication and irrelevant data, such as “ghost rates,” services provided by atypical providers.
“A range of other well-documented data issues make it challenging to analyze the data, make comparisons, and draw meaningful conclusions,” Health Affairs reports.
Private Equity Intruded
Missing from the analysis of price transparency failure is the corporate takeover of independent doctor practices. More than 75 percent of physicians now work for a hospital or large group practice, and many of those providers are owned by private equity investors.
An independent doctor may recommend an MRI and not care where the patient gets it done. A patient may be able to get a recommendation where there is a good price with good quality. However, if the doctor is employed by a hospital, it is likely the patient will be directed to the employer’s facility.
What good is information on prices if a doctor is under orders to steer a patient to a specific provider’s facilities where prices are high?
Furthermore, if a physician’s order requires multiple tests and follow-up care, should those physicians be allowed to steer patients to services that are unusually costly?
Competition Thwarted
Price transparency is a necessary condition for competition to thrive. However, it is not the only requirement. Price transparency is the natural response when firms compete for consumers on price, quality, and other amenities.
Firms competing for consumers do not have to be required to disclose prices. Firms do it because when they fail to reveal how much something costs, they lose business. The U.S. health care system, however, is not competitive. Two things could be at play. Either health care firms believe price transparency is of no use to them, or they realize revealing prices actively reduces profits.
Once patients begin to realize they can save money by comparison shopping, providers will have an incentive to compete for their business. Merely mandating price transparency will not get us to competition without the additional steps required to allow competition to flourish.
Devon Herrick ([email protected]) is a health care economist and policy advisor for The Heartland Institute. A version of this article appeared on the Goodman Institute Health Blog. Reprinted with permission.
Internet Info:
Stacy Pogue, “New Executive Order Outlines Next Steps for Health Care Price Transparency,” Health Affairs, March 19, 2025: https://www.healthaffairs.org/content/forefront/new-executive-order-outlines-next-steps-health-care-price-transparency
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Devon Herrick, Ph.D., worked for the National Center for Policy Analysis (NCPA) until it ceased operations in July 2017. He is a policy advisor to The Heartland Institute.
