Transparency in Health Care: It’s Up to States to Lead

Healthcare is the only industry in which we are expected to buy a service without knowing the price. That can and should change.

Imagine going to the hardware store and purchasing a new lawnmower without knowing the price. That is something most Americans wouldn’t do. So why do we accept that in health care? The idea that health care costs are too complicated to know up front is a fallacy and one we need to correct. Patients should know prices (or at least a good estimate) before receiving treatment. This knowledge can help them make informed decisions about their care.

Hospitals have prices for the various services and procedures they offer—often referred to as a chargemaster. When the Affordable Care Act was enacted, hospitals were required to make these price lists public. An executive order by former President Donald Trump amended the rule requiring hospitals to post all prices for all payers and plans, including discounted cash prices online in an easily accessible and searchable format. The rule went into effect in 2021, and as of February of 2023, only about a quarter of hospitals were in compliance.

Due to a lack of federal enforcement of the law, some states are codifying these requirements themselves. Colorado, along with Texas and Virginia have been leaders on this issue. Last year, Colorado passed a law preventing hospitals from sending accounts into debt collection unless the hospital was in compliance with federal law. Colorado built on their efforts a couple of weeks ago passing SB 252, which allows the state to enforce the federal transparency requirements or face penalties.

Research shows that pricing among hospitals can vary wildly for the same services—sometimes even just a few miles apart. For cash payers, patients who have not met their deductible and those on sharing plans, knowing the price of the service they receive is a necessity that allows them to plan for their health care needs and avoid huge surprise bills.

Individual patients are not the only on parties that benefit from price transparency laws. Employers, especially those with self-funded plans, can see a huge benefit from knowing prices up front. Access to cash and insurer plan prices can help them negotiate lower prices with providers. It also allows them to incentive their employees through “right to shop” type programs that let employees share in savings.

Healthcare is the only industry in which we are expected to buy a service without knowing the price. That can and should change. Since federal laws aren’t being enforced, it is up to states to take the lead and put patients back in charge. ALEC’s Hospital Price Transparency Act – one of our Essential Policy Solutions for 2023ensures hospitals are compliant with federal law and gives states the power to enforce those laws.

In Depth: Health

There has never been a time when both federal and state jurisdictions have been more in control of American’s healthcare than it is today. Implementation of the Affordable Care Act is well in motion, and each state has considered how to address provisions of the federal law as it has…

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