Texans like to know up front what they’re paying for goods and services. That’s especially true of their health care services—yet prices in hospitals, where we spent the largest portion of our health care dollars—can remain a mystery.
But now, state Rep. Tom Oliverson, a medical doctor himself, has filed a bill that would require hospitals to disclose their prices for the most common services and items. This builds on Oliverson’s previous work to lower costs and ensure better access to health care for all Texans, including his bill last session that ended surprise medical billing.
Speaking at a recent forum on health care reform, Oliverson noted that, “Because the patient is kept in the dark until after the service is provided, we do not have a cost-effective health care delivery system. It just doesn’t exist.”
The Trump administration issued an executive order on hospital price transparency last year, but hospitals have dragged their feet and even sued to prevent the order from taking effect. The American Hospital Association claims that “disclosure of privately negotiated rates does nothing to help patients understand what they will actually pay for treatment and will create widespread confusion for them.” It even claims that posting prices will “accelerate anticompetitive behavior.”
Texans disagree. They support hospital price transparency—strongly. According to a new Texas Public Policy Foundation poll, 89% of Texans believe patients should be told the price for non-emergency procedures and treatments before doctors perform them.
It matters to families because most of us have traditional insurance, which has a deductible we’ll owe, and then a portion (usually 20 percent) of the final bill that we’ll also be responsible for paying.
Let’s take two Pennsylvania hospitals as an example. According to our data, an uncomplicated birth for members of Independence Blue Cross Insurance at the Hospital of the University of Pennsylvania in Philadelphia would run $13,055 (posted, on average). But at Chester County Hospital in West Chester, the posted price is $5,395 under the same plan. That’s a difference of $7,660—and just 32 miles.
What would that mean be for a young Pennsylvania family with a typical insurance policy—a $5,000 deductible and a 20 percent copay? A whopping $1,532, at a time when the family’s other new costs, from diapers to doctor visit copays, are mounting, as well.
Knowing prices can make a big difference in that young family’s lives. Imagine if prices were deliberately hidden from them in any other context: “Choose any car on the lot—but you’re on the hook for the full sticker price, when we eventually let you know what it is.”
The Biden administration has yet to weigh in officially on the price transparency rule. But President Joe Biden’s nominee to lead the Department of Health and Human Services, Xavier Becerra, promised “robust enforcement” of the rule, adding in a congressional hearing that “For far too long, people have never had an idea of what they are going to pay if they walk into a hospital.”
The administration should, of course, support something so universally backed by the American people. It should also increase penalties for noncompliance—which, at $109,500 per year, per hospital, is low enough that some hospitals would rather pay it than follow the law.
In the meantime, though, the Texas Public Policy Foundation, along with Health Cost Labs, have developed a Hospital Price Transparency Index that will provide compliance rates by state.
The score card shows how many of each states’ hospitals have posted their secret negotiated rates. The greater the compliance, the more opportunity for downward pressure on hospital rates.
Rep. Oliverson’s bill—and its Senate counterpart, filed by Texas Sen. Kelly Hancock—will help ensure that Texans can see prices up front. And this, in turn, will help make health care more affordable.