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With his groundbreaking executive order on health care price transparency, President Donald Trump paved the way to protecting American patients and employers from the inflationary costs of the American health care system.
Riddled with waste, fraud, and price gouging, the American system has purposefully hidden prices for too long, burdening the true purchasers of care—patients, employers, and taxpayers—with overcharges, hidden fees, and surprise medical bills. No wonder American employers consistently list runaway health care costs as their biggest challenge.
Real, upfront prices would reverse those inflationary costs.
A free-market framework in health care would reduce a gargantuan expense in company budgets and ultimately put more money back into the pockets of employees. But this framework is only possible through price transparency, which would allow business owners to negotiate competitive rates and offer better benefit plans to lower costs. It would also be a boon for individuals who purchase their own insurance.
Employers have no insight on fair market rates or what they should be paying, and as a result health care costs continue to soar. Knowledge of actual prices will empower employers and unions to design affordable health plans with billing and payment integrity and will allow swift remedy and recourse for overcharges. Individual buyers could actually do comparison shopping—just as they do for other products and services they buy.
It's no secret that Americans today are often blindsided by sky-high medical bills costing them up to 10 times the fair market price of treatment. Without transparency, wide price variation goes unchecked. Patients may be charged $12,000 for a colonoscopy instead of a fair market price of $1,000 for the same procedure.
Exacerbating this issue, only 21 percent of reviewed U.S. hospitals follow federal transparency rules requiring them to post the prices of major services and procedures online for all to see.
Price transparency is a basic requirement for a free market. Competition allows consumer choice to drive down prices and encourages increased quality and innovation, no matter the industry.
With full visibility of health care prices, companies and unions would also be better equipped to save money on insurance plans and pass down those savings to employees in the form of higher wages and more take-home pay, allowing employees to offset the high cost of living. The self employed would obviously benefit as well. In fact, leading economists agree that health care price transparency will free up $1 trillion in our economy every year, generating an enormous economic stimulus while reining in the runaway costs plaguing businesses nationwide.
A Centers for Medicare and Medicaid Services report found that health care spending in the United States grew 7.5 percent in 2023, reaching $4.9 trillion—that's $14,570 per person, and 17.6 percent of the nation's GDP. Much of this, though, is preventable with 25 percent being spent on waste, overcharges, and fraud.
The president's renewed and expanded standard of transparency is positioned to end this inefficiency and abuse. The executive order doubles down on steps he took during his first term to promote transparency along with health care choice and competition and to improve the quality of care.
President Joe Biden publicly endorsed and supported health care price transparency. But for four years, Health and Human Services Secretary Xavier Becerra actually rolled back transparency requirements and slow-walked enforcement.
That was unfortunate given that nine out of ten Americans support the policy. Trump's willingness to make transparency a priority is a bipartisan win.
With transparency, accountability, and choice, affordable health care could soon become the norm for employers and patients. In unleashing the free market to foster healthy competition, we can lower costs for all purchasers—employers, patients, unions, and taxpayers alike.
Steve Forbes is Chairman and CEO of Forbes Media.
The views expressed in this article are the writer's own.
