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Price Transparency: Bipartisan but Likely Ineffective

The idea of bipartisan policy solutions is incredibly popular among Americans—virtually every demographic views bipartisanship positively, and 87 percent of Americans overall say that bipartisanship is a good thing. Of course, well over 80 percent of both parties think that it is the other side that needs to make concessions, with the unsurprising result that bipartisan agreements are few and far between. But even when these agreements come to fruition, it’s not always clear how useful the resulting policies are. Such is the case with transparency in health care prices, an incredibly popular concept with bipartisan support that may not have much of an impact.

Recently, Ashley Brooks and I wrote about the Trump Administration’s focus on health care price transparency. Under President Trump, the Department of Health and Human Services issued two major rulemakings—one focused on hospital transparency and the other on insurer transparency. While the Biden Administration has made a lot of show of reversing course on most of the Trump Administration’s health policy agenda, on transparency it seems poised to continue forward on the same path. Bipartisanship!

Many conservatives see transparency as crucial to bringing greater marker forces to bear on rising health care costs. Progressives, on the other hand, are often more suspicious of private-sector actors in the health care industry and see transparency as exposing profiteering to sunlight. Transparency is overwhelmingly popular and—broadly speaking—is a good thing, especially in complicated transactions involving expensive goods or services. Even in uncomplicated transactions, knowing the various prices facilitates an effective marketplace.

Nevertheless, a number of factors constrain the effectiveness of transparency in the health care market specifically. Patients, for one, are limited in their ability to apply pricing and outcomes information. Patients can only go to the providers in their network to get the negotiated prices, and they still have to pay the same negotiated rate regardless of what other insurers have negotiated.

Transparency could also ultimately raise prices for some consumers. As pricing arrangements become public, prices are likely to equalize. It’s not guaranteed, however, that the lowest price previously available will be the one that the market settles on. Shining light on the various discounts that insurers negotiate is more likely to lead to fewer discounts than to more people benefiting from them.

For the moment, the Biden Administration seems likely to continue the Trump Administration’s policies on health care transparency, or even expand them. But whether these bipartisan policies will be effective in constraining health care costs remains to be seen.

 

Chart Review: Hospital Compliance to the CMS Price Transparency Rule

Jackson Hammond, Health Care Policy Analyst

Policymakers from both parties have expressed interest in creating more transparency around hospital costs. To that end, in 2019 the Centers for Medicare and Medicaid Services (CMS) required hospitals to make a list of standard charges, or a chargemaster, available on the internet in a machine-readable format. The goal was to ensure price transparency, empowering patients and payers to select more affordable services, thereby putting downward pressure on hospital prices. In a recent study published in the Journal of the American Medical Association, researchers looked at hospital compliance with the 2019 price transparency rule after 18 months. Overall, the researchers found that 51.5 percent of all U.S. hospitals associated with a website did not have an online chargemaster in a machine-readable format. The chart below reflects the findings of the researchers’ analysis to calculate the likelihood of hospital compliance in relationship to hospital ownership. As the chart shows, religious ownership and federal ownership of hospitals were associated with lesser compliance, while private for-profit ownership was associated with higher compliance. The researchers did not explore the reasoning for this, but it may be that for-profit hospitals are far more wary of being scrutinized and penalized by the federal government for non-compliance, on top of their ability to more easily afford compliance. Hospitals with religious ownership may be both less able to afford compliance and more politically sympathetic, and thus less likely to be scrutinized.

Hospital Compliance with CMS Price Transparency Rules

Source: Journal of the American Medical Association

 

Video: President Biden’s Health Care Agenda

AAF’s Director of Health Care Policy Christopher Holt discusses the discrepancy between President Biden’s campaign promises and his current health care agenda.

 

Tracking COVID-19 Cases and Vaccinations

Jackson Hammond, Health Care Policy Analyst

To track the progress in vaccinations, the Weekly Checkup will compile the most relevant statistics for the week, with the seven-day period ending on the Wednesday of each week.

Week Ending: New COVID-19 Cases:
7-day average
Newly Fully Vaccinated:
7-Day Average
Daily Deaths:
7-Day Average

May 19, 2021

27,788

740,687

497

May 12, 2021

34,501

1,160,689

556

May 5, 2021

45,558

1,363,776

607

April 28, 2021

51,832

1,411,837

631

April 21, 2021

61,026

1,458,296

667

April 14, 2021

67,937

1,707,890

663

April 7, 2021

63,613

1,545,399

583

March 31, 2021

63,612

1,345,797

721

March 24, 2021

57,363

950,485

730

March 17, 2021

53,012

1,011,383

887

March 10, 2021

54,130

942,545

1,161

March 3, 2021

61,208

901,205

1,436

Feb. 24, 2021

64,885

833,307

1,796

Feb. 17, 2021

74,206

735,567

1,936

Feb. 10, 2021

99,124

691,791

2,411

Feb. 3, 2021

129,813

476,501

2,697

Jan. 27, 2021

156,705

331,728

3,131

Sources: Centers for Disease Control and Prevention Trends in COVID-19 Cases and Deaths in the US, and Trends in COVID-19 Vaccinations in the US

Note: The U.S. population is 332,343,732.

 

Worth a Look

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Axios: Telephones played a key role in pandemic telehealth

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