Time to Bring Hospital Pricing Out the Shadows, It's Long Overdue
Just one in five hospitals is complying with federal price-transparency rules today, according to a new report from the group Patient Rights Advocate.
Put differently, hospitals are keeping the prices of their services secret in violation of the law. The healthcare sector — and more importantly, patients — are worse off for it.
Ready access to clear and accurate pricing data is a basic prerequisite for any functioning market. Without it, consumers struggle to compare prices, leaving businesses free to charge whatever they feel the market will bear.
This logic applies just as much to the market for produce and smart phones as it does to MRI scans and hip replacements.
The incoming Trump administration must make enforcing existing hospital price-transparency requirements a priority.
Doing so would bring greater competition, choice, and transparency to a part of the health system that is desperately short of all three.
It was President-elect Trump's 2019 Executive Order that directed hospitals to post their prices online in an easily searchable, consumer-friendly format.
Among other things, the rule demands that hospitals release the insurance-negotiated rate and cash price for 300 common healthcare services, including everything from heart surgery to blood tests.
The rule took effect in 2021. The idea was that patients would gain control over how their healthcare dollars were spent.
They could shop around for the best-value care if they had access to pricing data.
Public pricing data could also compel hospitals to lower their own prices — or risk losing business to less expensive competitors.
Trump's push for greater hospital price transparency was one of the few measures President Biden did not try to undo upon taking office in 2021.
His administration released requirements of its own in 2023.
Unfortunately, most hospitals have simply ignored these orders.
The Patients’ Rights Advocate study looked at the websites of 2,000 hospitals and found that just 21.1% were fully compliant with federal price transparency requirements.
That's a steep decline from February 2024, when 34.5% of hospitals complied with them.
For some hospitals, ignoring the rules may be cheaper than complying with them. In 2022, the federal government raised the maximum annual fine for noncompliance to $2 million. As of April 2024, officials had only fined 14 hospitals anywhere from $56,940 to $979,000.
The report also sheds light on the real-world impact of Biden's updated transparency requirements, which went into effect this summer.
Far from strengthening Trump's initial rule, Biden "permit[ted] hospitals to obfuscate their prices behind estimates, averages, and algorithms, while still being deemed compliant."
For the most part, this is exactly what hospitals have done.
The share of hospitals posting their prices in straightforward dollars-and-cents figures is just 16.8%, according to the study.
Hospitals that were fully compliant with federal rules and posted their prices in dollars and cents accounted for a mere 6.7% of the 2,000 facilities analyzed in the report.
The story that emerges from these findings is clear.
President Trump put in place commonsense price transparency rules near the end of his first term. The Biden administration not only failed to adequately enforce those requirements — it weakened them.
The result has been a hospital market only marginally less opaque than before any of these reforms took effect.
As the new Trump administration considers ways to make high-quality, affordable healthcare more widely available, a renewed focus on price transparency deserves a spot on the top of the list.
It would go a long way toward injecting competition into the hospital sector. It would also move us closer to a health system tailored to the needs of individual patients.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.
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