Overview  

Every functioning market rests on one foundational requirement: buyers must know what something costs before they purchase it. That principle, taken for granted in virtually every other sector of the American economy, has been systematically absent from healthcare. The result is a system where patients regularly overpay for lower-quality care, small businesses subsidize inefficient systems and are kept in the dark about how their healthcare dollars are spent, and providers who offer high-value, lower-cost services are squeezed out by anti-competitive contracting arrangements and protect incumbent hospital systems. 

This is not a market failure in the traditional sense. It is the predictable result of decades of policy choices that have shielded pricing from public view, insulated high-cost providers from competitive pressure, and structured insurance products in ways that disconnect the person receiving care from any incentive to consider its price.   

Price transparency does not mean government price-setting. It means the opposite: giving patients, employers, and providers the information they need to make their own market-based decisions. Where real pricing information flows freely, competition follows. Where competition follows, costs come down, and quality goes up. The solution to healthcare affordability is not more government spending or regulatory mandates; it simply requires more transparency, more competition, and more power in the hands of the patient.   

State governments have both the authority and the obligation to act. Federal transparency rules established in recent years represent meaningful progress, but state laws must be aligned and strengthened to close gaps. Comprehensive reform requires that disclosure obligations extend to all care settings, that patient incentives be restructured to reward cost-conscious decisions, and that anti-competitive practices embedded in provider-insurer contracts be prohibited by law. 

Guiding Principles  

Transparency Must Be Automatic, Not on Request  

Pricing disclosure requirements that depend on a patient knowing to ask are not, in practice, transparency requirements at all. Patients who lack upfront price information often avoid care or make treatment decisions without the information needed to weigh their options realistically. Patients should not have to navigate bureaucratic request processes to know what their care will cost. Upon scheduling a non-emergency appointment, a patient should automatically receive a good-faith estimate of expected charges within 48 hours, or sooner when the appointment falls within that window. The estimate should include both total anticipated charges and an out-of-pocket cost projection based on the patient’s coverage, or at a minimum, a clear explanation of how the patient can obtain that projection. No request should be required.   

Disclosure Standards Must Cover All Providers and All Care Settings  

Price transparency obligations in most states apply only to hospitals and ambulatory surgery centers. Physician offices, specialty clinics, diagnostic facilities, and other outpatient settings are typically excluded, leaving patients without pricing data for a substantial portion of their actual healthcare utilization. All providers of all non-emergency services should be subject to uniform disclosure requirements. This includes the cash rate a provider would accept for services rendered, which is relevant to both insured and uninsured patients and essential to enabling meaningful price comparison.  

State and Federal Standards Should Be Aligned  

Conflicting or duplicative state and federal disclosure requirements create administrative confusion without improving patient access to information. States should codify the federal definition of “standard charge,” which encompasses gross charges, payer-specific negotiated rates, discounted cash prices, and de-identified minimum and maximum negotiated charges across all payers. Uniform definitions allow third-party price comparison tools to function effectively, enable employers and patients to make meaningful comparisons across providers and plans, and reduce compliance costs for providers operating in multiple regulatory environments.  

Patient Incentives Must Align with Cost-Conscious Decisions  

Transparency without incentives produces limited behavioral change. A patient who has met a high deductible has little financial reason to seek lower-cost care, and a patient who has reached an out-of-pocket maximum has none. Current benefit designs routinely disconnect patients from any stake in the cost of their care at precisely the point when they are most likely to make high-cost treatment decisions. When a patient selects a cash-priced provider whose rate falls below the lowest negotiated rate available under their plan for the same service, that patient should receive credit toward their in-network deductible or out-of-pocket responsibility. The same standard should apply to prescription drugs. Patients who continue to seek cost-effective care after exceeding their deductible should receive a direct savings incentive for doing so. Aligning incentives in this way benefits the patient, the employer, the insurer, and the broader premium pool.  

Network Barriers Should Not Penalize Patients for Choosing Lower-Cost Care  

Insurance network architecture has, in many markets, become a mechanism for insulating high-cost providers from competitive pressure rather than a tool for directing patients toward quality and value. High-quality, lower-cost providers are routinely excluded from preferred networks through contractual arrangements negotiated between dominant hospital systems and insurers, to the financial detriment of patients and employers. When a patient selects a cash-priced provider for medically necessary covered services at a rate below the lowest negotiated rate in their plan, that patient should receive in-network credit as though the service were rendered by a participating provider. Network status should not override the basic principle that a patient who saves the system money should not be financially penalized for doing so.  

 Anti-Competitive Contract Provisions Must Be Prohibited:  

A transparent market cannot function when pricing information is suppressed and competition is contractually foreclosed. Several categories of provider-insurer contract provisions that are currently widespread have precisely these effects and should be prohibited by state law:  

• Pricing “blackout” provisions that permit hospital operators to suppress their rates from appearing on insurer-operated price comparison platforms.  
• Gag clauses that prohibit providers, in any care setting, from disclosing prices or costs to patients or to other parties acting on a patient’s behalf.  
• “All-or-nothing” provisions that require insurers to include all providers affiliated with a dominant system in their contracted network, regardless of cost or quality performance, as a condition of contracting with any of them.  
• “Most-favored-nation” clauses that prohibit providers from offering more competitive rates to other insurance carriers, locking in elevated pricing and suppressing rate competition.  
• Exclusive contracting provisions that prevent an insurer from contracting with additional competing providers, effectively shielding existing contracted providers from market discipline.  

Each of these provisions operates to the detriment of patients and the broader market. Their elimination is a precondition for price transparency to produce the competitive outcomes it is designed to generate.  

Small and Mid-Sized Employers Must Have Access to Their Own Claims Data  

Large self-insured employers have the staff and leverage to demand and analyze detailed claims data for their employee health plans. Small and mid-sized employers generally do not, and they bear the cost of that information asymmetry in the form of plan designs that do not reflect actual utilization patterns, missed opportunities to redirect employees toward higher-value providers, and premiums that do not correspond to the care their workforce is actually receiving. Employers of any size sponsoring an employee benefit plan should have the right to request up to 36 months of claims data for their plan, with that data to be provided within 30 days of the request. Several states have enacted this requirement, and it should be standard practice.  

Reference-Based Pricing Should Be Applied to Public Employee Health Plans  

State and local governments are among the largest purchasers of health coverage in any market. Failing to use that purchasing position through reference-based pricing is a significant and largely unnecessary cost to taxpayers. Reference-based pricing sets a benchmark reimbursement level for defined procedures and rewards employees who choose providers at or below that benchmark, while preserving access to higher-cost options for those willing to pay the difference. States that have implemented reference-based pricing programs have documented substantial savings. When paired with a shared-savings incentive program, reference-based pricing creates sustained downward pressure on costs and provides a replicable model for commercial market reform.  

Medical Debt Collection Should Not Precede Price Disclosure  

The extension of credit damage and debt collection actions against patients who were never given the required pricing information before receiving care is inconsistent with any reasonable interpretation of the obligations that price transparency law creates. A provider that has not disclosed required pricing information in advance of delivering services should be prohibited from referring the resulting balance to a collections agency or reporting it to consumer credit bureaus. This principle has bipartisan support and has been enacted in at least one state as a logical complement to existing surprise billing protections.  

Patient Education and Public Data Resources Should Support Market Function:  

Behavior changes when patients understand the implications of their choices. Insurers should be required to notify patients when they have received care from a provider in the highest cost tier for their area and to provide information about how to identify higher-value alternatives. State-run price comparison tools should be updated to reflect plan-specific negotiated rates rather than undifferentiated charge data, following models established in New Hampshire and Washington that allow enrollees to obtain estimates reflective of their actual coverage. All claims data collected by state all-payer claims databases should be released in de-identified form as soon as it is available in a standardized format, making it accessible to researchers, employers, and the third-party tools that patients increasingly rely on to navigate their care decisions.  

No Price Controls, No Subsidies as Substitutes for Structural Reform  

Administered pricing and rate suppression do not reduce the cost of care; they shift it, defer it, or eliminate the provider participation that makes care available at all. One-time subsidies to purchasers or providers address symptoms rather than the structural conditions that produce high prices. The principles set out in this statement are grounded in the view that durable cost reduction in healthcare requires the same conditions that produce it elsewhere in the economy: informed buyers, competing sellers, and a legal environment that protects the integrity of the market rather than the position of incumbent market participants.  

Conclusion  

Healthcare price transparency is the foundation upon which a competitive, patient-centered healthcare system is built. The tools, platforms, and policy frameworks to establish genuine price transparency in healthcare already exist, have been tested in multiple states, and do not require new government spending or novel regulatory authority. What they require is alignment of state law with federal standards, extension of disclosure obligations to all care settings, restructuring of patient incentives to reward cost-conscious decisions, and the elimination of anti-competitive contracting arrangements that have suppressed pricing information and insulated high-cost providers from accountability for a generation. State leaders who act on these principles will deliver measurable, sustained relief for patients, employers, and public employees who have waited long enough.