The U.S. healthcare industrial giant is a beast that even Christopher Nolan’s Odysseus would struggle to slay. The multi-tentacled monster — consisting of large hospital systems, insurance conglomerates, and medicine gatekeepers — grows ever larger by the year as Washington feeds it taxpayer dollars. Congress finally seems ready to begin taming it.
The weapon of choice: transparency.
Before departing Washington for the August recess, committees in both the House and Senate advanced legislation to shine more light on hospital prices. If successful, the proposals will extend existing cost disclosure standards to even more routine medical services — turning what are often hidden pricing schemes into an easily understood menu of options.
For some patients, the change will translate to lower prices. The cost clarity will strengthen free-market competition and empower families to shop around for the best deal. A clinic across town could administer a cheaper blood test, or a hospital closer to work may offer more affordable preventive screenings. Such a dynamic will pressure prices to fall and hold providers accountable to market forces.
Estimated savings vary wildly, but all point in the same direction. A study from the University of Minnesota finds that implementing stronger price transparency rules will lower costs by between $17 billion and $80 billion annually. Meanwhile, an analysis from Brown University suggests the associated savings would translate into billions in extra federal revenue. Similar to the downstream effects of a tax cut, extra cash in American wallets fuels economic activity and means more taxable income.
“Patients deserve price tags, not surprise bills … It’s time to put patients back in charge,” said bill sponsor Sen. Roger Marshall (R-KS) following its committee passage. Even Sen. Bernie Sanders (I-VT), a self-described “democratic socialist,” gave the legislative proposal a thumbs up.
The bipartisanship should not be surprising. Cost clarity is an effective prescription to improve affordability across the economy — whether for train tickets, hotels, or medical care. The online booking platform Expedia, for example, provides users with easily comparable prices, so Marriott must compete with Hilton for a traveler’s business.
But the healthcare industrial giant is entrenched in Washington. Congress can expect the beast to fight back.
According to OpenSecrets, the hospital industry’s lobbying arm spends roughly $30 million a year to influence policy — some of which is being used to throw punches against the transparency push. In July congressional testimony, for example, the group argued the proposal will create additional “administrative burdens” and “be both difficult to execute and costly to maintain.”
The crafty positioning is intended to resonate with Republicans who are skeptical of unnecessary government regulations and the compliance costs they impose on the private sector. But even most conservatives would agree that disclosing the price of a good or service is an extremely low bar that any business should clear.
The U.S. healthcare industrial giant is too big for Congress to take down with a single piece of legislation. It will require consistent effort over many years to chip away slowly at the complex web of special interests to bring the beast to heel. At least Washington is putting up a fight.
Tom Price served as the 23rd secretary of health and human services and is a former Republican member of Congress from Georgia.