Evaluating the Trump Transparency Initiative
Per capita health spending in the U.S. is more than twice the average of other rich countries. These excesses are concentrated in the commercial sector—consisting mainly of employer-sponsored health plans—where prices are set in markets through annual bargaining between plans and providers. In virtually every other developed country, government-run or -supervised health systems set payment rates administratively, as do Medicare, Medicaid and the Veterans Administration. The prices paid by U.S. employer plans can be several times those found in Switzerland or France. In 2017, commercial prices for a market basket of common procedures in the U.S. averaged 241 percent of Medicare rates. In supporting Medicare-for-All and various “public option” proposals, many Democrats in Congress and on the presidential campaign trail implicitly question whether market pricing is viable in America’s health sector.
Executive Order 13877, signed by President Donald Trump on June 24, 2019, provides a coherent counterpoint. It directs a constellation of initiatives designed to strengthen price signals, by reducing barriers to price and quality transparency; increasing the availability of such information to patients; enhancing patients’ control over healthcare resources (e.g. through health savings accounts); and protecting against “surprise” medical bills by out-of-network providers in in-network hospitals. The E.O. also directs federal agencies to make de-identified patient data more widely available to researchers, health plans and providers.
To this end, on November 15, the Department of Health and Human Services (HHS) published a rule mandating a particularly aggressive version of hospital price transparency. On the same day, HHS and the Departments of Treasury and Labor jointly released an even more ambitious proposal to require most health plans to disclose their in-network negotiated rates with all providers, including hospitals, physicians, out-patient and testing centers. Both rules are scheduled to take effect in 2020.
In this article, we address the implications of medical price transparency for consumers, drawing in particular on New Hampshire’s experience. We also address potential interaction of transparency with expanded federal data sharing. The latter will require implementing legislation, but could prove essential in eliminating the many inefficiencies that plague American medicine.