Health Care Price Transparency Is Having a Michigan Moment
SB 95, sponsored by Senator Jonathan Lindsey, prohibits hospitals from collecting on medical debt if the facility did not comply with federal price transparency laws at the time of service.
This week, Michigan moved closer to joining a growing number of states that have enacted healthcare price transparency policies on a bipartisan basis. SB 95, sponsored by Senator Jonathan Lindsey, was approved overwhelmingly by the Michigan Senate in a 35-1 vote. The legislation would prohibit hospitals from collecting on medical debt if the facility did not comply with federal price transparency laws at the time of service. With SB 95, Michigan seeks to joins seven other states in passing laws to encourage compliance with federal requirements.
On June 24, 2019, then-President Donald Trump signed an executive order aimed at transforming the hazy world of American healthcare pricing. This order empowered patients by requiring hospitals and insurers to disclose the real costs of medical services upfront. Unfortunately, it was not enforced, and compliance is low. As a result of this inaction, states took matters into their own hands, passing transparency laws that allowed for state enforcement.
This state-led transparency movement continues to gain ground, with Michigan being the latest state to introduce legislation to demystify the country’s healthcare system. Michigan follows in the footsteps of Colorado, the first state to pass such a law to give hospitals a strong incentive to comply with transparency requirements These state initiatives demonstrate that when federal enforcement falls short, states can effectively advance and enforce their own healthcare price transparency efforts.
These transparency laws help patients take control of their healthcare by allowing them to compare prices for similar services at different hospitals and make informed decisions about where to receive care. The ability to know costs up front also helps prevent unexpected or surprise medical bills and assists patients in planning for healthcare expenditures. Price transparency can also help to drive competition between hospitals, resulting in lower costs.
Although federal enforcement has been lacking, states are about to get some help with their transparency efforts. President Trump doubled down on his price transparency requirements by signing an executive order on February 25 requiring hospitals and insurers to provide actual prices (not estimates). The order also calls for the development of a standardized format for presenting price information, which will make comparing prices across facilities or plans easier for patients. President Trump directed federal agencies to implement robust enforcement mechanisms to ensure compliance—including the possibility of increased penalties for non-compliance.
The Trump administration’s mission to Make America Healthy Again isn’t just limited to food sources and dietary concerns. It includes giving people control over their healthcare. Knowing what their healthcare costs empowers patients to make better decisions, which helps make Americans both physically and financially healthier. Hospital price transparency laws like Michigan’s are just the first step toward untangling the complicated mess healthcare pricing has become.