What Health Care Needs Now: Transparency of Real Pricing

As the Trump Administration continues to issue an unprecedented number of regulatory waivers and rules to allow the medical professionals in our health care system to respond to the COVID-19 pandemic, Congress goes about its business of creating unintended consequences.

The well-intentioned policies of eliminating cost-sharing for patients testing positive for the COVID-19 virus coupled with the new diagnosis codes from the Centers for Disease Control (CDC) lay the groundwork for potentially perverse incentives in the system that will further create chaos in an already dysfunctional industry.

Accountability is needed in the form of price transparency and full access by patients to their medical records. This could be done in the next installment of the stimulus package currently being discussed.

According to a National Center for Health Statistics alert dated March 24, “a newly-introduced ICD code has been implemented to accurately capture mortality data for Coronavirus Disease 2019 (COVID-19) on death certificates.” Hospitals also use these ICD codes for billing purposes when submitting claims to government programs such as Medicare and Medicaid, as well as private insurers.

According to a new analysis by FAIR Health, “The total charges to treat COVID-19 within hospital settings are projected to range from at least $362 billion to as high as $1.45 trillion.” Even with the allowable or “payable amounts” ranging between $139 billion to as high as $558 billion, this stands to be a significant influx into the hospital industry at a time when elective procedures have come to a grinding halt.

The increase in costs associated with the pandemic coupled with a number of regulatory requirements by federal and state authorities may impact premiums even further. The federal government made allowances for “no-cost” COVID-19 testing and many state governments have either mandated or requested insurers to provide treatments and/or telemedicine at no cost to policy holders. It shouldn’t be a surprise if we see some form of stimulus or bail-out package for the insurers in the next iteration released by Congress.

This cycle of governmental interference resulting in unintended hardship on private industry which leads to government bailing them out that ends up costing the taxpayer needs to come to an end. The root cause of our broken health care system is that the prices are inordinately and unnecessarily high.

According to a poll done by the Gallup organization, the American people are most concerned with the costs of health care—and they are right to be. According to Gallup, “One in four Americans mentioned an issue related to the cost of healthcare in the latest survey, while nearly as many, 22%, mentioned something related to healthcare access. These two issues have topped the list each year since 2003.”

Another study  released by the Harvard School of Public Health this year stated, “About 80% of Americans say reducing health care and prescription drug costs are their top priorities, regardless of party affiliation.”

Americans are right to focus on costs, because invariably they are the limiting factor when discussing access. As costs have gone up, more and more insured and uninsured people alike are avoiding necessary medical care.

Even in the advent of the ACA and Medicaid expansion, the presence of an insurance card has not proven to result in better care. Mortality, which is a relatively simple metric of health outcomes, was used to measure the effectiveness of Medicaid expansion. Studies have demonstrated that mortality worsened in Medicaid expansion states relative to non-expansion states after 2013.

Now that we recognize the many problems associated with the health care industry, it is time to come to the table with solutions that matter. The single biggest reform that Americans want for the health care industry is to have unfettered transparency of real pricing.

The Trump administration put out an executive order in 2019 that has been the subject of litigation since its release by the American Hospital Association and its’ coalition. The plaintiffs suing the Administration claim, “disclosing negotiated rates would not help patients or consumers make prudent decisions. That is because the information that is most meaningful to patients is their specific out-of-pocket costs for specific procedures.” Patients, lots of them, clearly think differently.

Congress now has an opportunity to codify a policy that may decrease costs and is something most Americans want.

David Balat is the director of the Right on Healthcare initiative at the Texas Public Policy Foundation.