President Trump signed an executive order Monday that will force insurers to disclose how much insurers pay hospitals for common services and let patients know what they’ll pay, too, before they agree to care.
Administration officials said for too long, patients have received details on list prices, negotiated payments and their out-of-pocket costs after they run tests or go under the knife — when it’s too late to shop around.
The administration said that lack of transparency results in less competition and artificially high costs.
“For too long it’s been virtually impossible for Americans to know the real price and quality of health care services,” Mr. Trump said. “With today’s historic action, we are fundamentally changing the nature of the health care marketplace.”
Mr. Trump’s order will kick-start a rule-making process that could take months.
Health and Human Services Secretary Alex M. Azar II said agencies will work quickly to fill in the lines of Mr. Trump’s vision and ensure that patients receive relief from a Byzantine pricing system.
“It can’t come a moment too soon,” Mr. Azar said. “Because every day, American patients are being taken advantage of by a system that hides critical information from them that they need to make decisions for them and their families.”
Monday’s executive order also makes changes behind the scenes, ordering the government to streamline how it measures quality of care and release loads of claims data to researchers, so they can brainstorm ways to cut costs.
Mr. Trump and his Republican allies failed to repeal and replace Obamacare. The president says he still wants to replace the 2010 heath care law, but for now, he is focusing on the underlying costs of pharmaceuticals and medical services instead of coverage changes.
He says the GOP has the chance to brand itself as the “party of health care” ahead of the 2020 elections.
His administration urged Congress to pass a “gag clause” ban, so pharmacy customers know if they can pay less with cash than with their insurance, and it is ordering drug companies to disclose list prices in TV ads.
He’s also pushing Congress to clamp down on “surprise billing,” in which unwitting patients receive services from out-of-network hospitals or doctors and get socked with huge costs.
The health insurance lobby has pushed back at disclosing rates it negotiates with hospitals, deeming it proprietary information.
Mr. Azar said that’s nonsense, pointing to the explanation of benefits that patients receive in the mail after they’ve accepted services.
“That explanation of benefits contains the list price for the procedure that you got, what the negotiated rate is between the insurance plan and the provider, and what your out of pocket is,” the secretary said. “And so that information is there. This is not some great state secret out there.”
Allowing hospitals and doctors to know what the competition is being paid could result in prices rising, however, if some hospitals demand the same negotiated payments that facilities across town are receiving.
Matt Eyles, president and CEO of America’s Health Insurance Plans, made that argument in a statement Monday, saying Mr. Trump risks “creating a floor — not a ceiling — for the prices that hospitals would be willing to accept.”
Sen. Ron Wyden, Oregon Democrat, said he likes the concept of more transparency, but suggested Mr. Trump’s order won’t be forceful enough if it just shines light on a high-price status quo.
“Real steps must be taken to lower prices for health care on everything from drug prices to medical procedures,” he said.
The policy does have natural appeal from a consumer standpoint, experts said.
“It’s hard to justify a system where patients can’t know in advance what they’re going to have to pay for health care,” tweeted Larry Levitt, senior vice president at Kaiser Family Foundation. “However, that doesn’t necessarily mean that greater transparency will drive prices down.”
“One thing President Trump’s executive order could do is shine a spotlight on the high price of health care. Ironically, that could strengthen the push for Medicare-for-all, a public option, or price controls,” Mr. Levitt added, referring to government-oriented plans pushed by Mr. Trump’s Democratic rivals.
Mr. Trump took a swipe at those plans in his White House announcement Monday, saying his order preserves choice while the single-payer plan pushed by progressive Democrats would replace private plans with a one-fits-all system.
“We will never let that happen,” Mr. Trump said.