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The House of Representatives will soon consider major legislation to promote health care price transparency.
Last month, the Energy and Commerce Committee of the U.S. House of Representatives unanimously reported out The Patient Act (H.R. 3561), which would require hospitals and health insurance companies to post the true prices of their medical services. Representatives Cathy McMorris Rodgers (R-Wash.) and Frank Pallone (D-N.J.) are sponsoring this legislation, one of six bipartisan committee measures to help patients and improve the functioning of the nation's troubled health care markets.
Today, few health care policy proposals attract broad bipartisan support. Health care price transparency, however, is one of those rare "unicorns." In this case, the bipartisanship has been given a boost, because the Biden administration has largely embraced and continued the Trump administration's groundbreaking regulatory efforts to require hospitals and health insurance companies to reveal their real prices.
Nearly 90 percent of Americans support health care price transparency, Washington has a golden opportunity to improve the lives of millions of Americans through a more affordable and competitive health care marketplace. In a recent report for The Heritage Foundation, we outlined several policy options for Congress to consider, which would benefit all Americans.
First, Congress can improve and codify the existing federal health price transparency rules. Laws are superior to regulations, which can change with new presidential administrations. This simple step can provide predictability and stability for the market. It sends a clear message: Price transparency is "here to stay." Importantly, Congress must also ensure that any statutory codification of the rules does not undercut market competition or personal choice or patient engagement. Beware of unintended consequences.
Second, Congress can require the Centers for Medicare and Medicaid Services (CMS), the agency responsible for the federal transparency rules, to develop a standardized price reporting format. Currently, price files posted by hospitals are in a variety of formats. This makes price comparisons confusing and time consuming for patients, limiting the benefits of price transparency overall. CMS should develop this reporting standardization with input from a variety of stakeholders, including data analytic experts and entrepreneurs, physicians, and others. During the process, Congress must closely monitor the development of such standards, and be prepared to intervene and make corrections if necessary.
Third, Congress can expand health savings accounts (HSAs) and allow the savings patients achieve by price shopping to be added (tax-free) to their HSA. This financial "reward" will drive patients to balance the quality and price of care to maximize their individual benefit. Congress should ensure that all Americans with insurance, regardless of its benefit design, can have such an account.
In tandem with HSA expansion, Congress can authorize a "shared savings" program for patients and insurers to better incentivize both stakeholders. If patients choose a more cost-effective care option, the insurers can split the savings with the patients in the form of a rebate, and patients can then deposit their share of the savings tax free into an HSA. With such an arrangement, insurers will also have a strong incentive to innovate and create tools to help patients optimize their personal care decisions.
These three legislative changes may be necessary, but they are not sufficient.
Patients need to know the quality of the services that they are buying, and quality information is a crucial piece of the health care delivery system transformation puzzle. Congress should encourage hospitals and medical professionals to post quality metrics, especially those important to patients but refrain from trying to set such specific metrics in statutory stone. Americans do not need yet another bureaucratic barrier to better patient care in a dynamic health care environment.
Since quality in American health care is uneven, there is a lot of work to do. The good news is that much good work is already underway. More needs to be done. Professional medical organizations, private sector organizations, consumer associations, and even state health agencies can utilize this momentum of price transparency to play central roles in improving health care through progress in quality transparency as well. They can monitor the posting of quality metrics and work with hospitals and medical professionals to continually improve, foster vital discussions on quality measures and standards, and publicize the performance of medical professionals and hospitals. This will complement congressional efforts to secure price transparency, and the powerful combination of price and quality information can drive competition for value, lowering costs, and improving medical outcomes for America's patients.
Too much of American health care financing and delivery is broken, yet progress in "fixing" the system is underway. Price transparency is an important step, but it will not cure all the current ailments negatively impacting patients. It is only the "first step" in addressing the deficiencies of the health care marketplace.
David N. Bernstein, MD, MBA, MEI, is a value-based health care senior researcher at the Institute for Strategy and Competitiveness at Harvard Business School and resident in orthopaedic surgery in the Harvard Combined Orthopaedic Residency Program (HCORP), which is based out of Massachusetts General Hospital.
Robert E. Moffit, PhD, is a senior fellow in health and welfare studies at the Heritage Foundation and a former chair of the Maryland Health Care Commission.
The views expressed in this article are the writers' own.
