The swamp strikes back — health-care edition

The swamp strikes back — health-care edition
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President TrumpDonald TrumpTrump defends indicted GOP congressman House to vote Thursday on holding Bannon in contempt Youngkin calls for investigation into Loudoun County School Board amid sexual assault allegations MORE wants you to see upfront prices for health care. That’s why a few months ago, the Department of Health and Human Services (HHS) recently published a request for comments about whether and how to end secret prices in health care. The deadline for comments was last week, and the submissions from the industries most threatened by consumers knowing and comparing prices — hospitals and insurance companies — are an exercise in Swamp-o-nomics.

First, a simple summary of the business models of hospitals and insurance companies: the higher your prices, the more money they make. This is no surprise when it comes to hospitals — after all, they’re the seller of the product, so of course they’ll want higher prices — on average, they charge insured patients more than triple what Medicare pays. Insurance companies market themselves to employers as fierce negotiators of steep discounts for their enrollees.

But for the biggest employers with the most enrollees, insurance companies are paid a percentage of the claims they process, meaning they take a slice of every bill they pay. The more patients and employers spend on health care, the bigger the slice goes to their insurance company.


In other words, it’s reasonable to conclude that hospitals and insurance companies have financial interests that are diametrically opposed to your own. It’s in their interest for you to keep signing away all your power in the doctor’s office or the emergency room, agreeing to pay you-don’t-know-how-much, for you-don’t-yet-know-which services, by doctors you may not even meet in the course of your care, such as the radiologist reading your x-ray.

All that secrecy is pretty hard to defend, but creative regulatory lawyers gave it a go.  The arguments the hospital and insurer groups made to HHS use can be boiled down simply. First, “you can’t make us.” Both groups complain that HHS doesn’t have the authority to require public disclosure of prices. But claims information — including prices charged by hospitals and the amounts paid by insurance — are already part of the definition of health information that has to be disclosed to patients after they’ve received care. It’s not a big stretch to suggest that they might have the right to see that information before they sign on the dotted line.

Second, “price information is ours, all ours.” The hospitals claim that price information is “confidential.” Confidential from whom? Most health care is a transaction involving four parties — a seller (hospital or doctor), the middleman (insurer), and the two buyers (employer and patient).

The reason why our health care markets are so fundamentally broken is because the sellers — in league with their conflicted middlemen — are able to keep prices secret from the buyers until it’s too late for them to object or shop elsewhere. The hospitals continue the doublespeak by asserting that if all plans knew the rates hospitals gave to each of them, it could “seriously disrupt negotiations with [other] plans.”  Well, yes, hospitals might have to give, you know, reasons behind their wildly varying prices.

Third, the hospitals and the insurance companies make other laughable arguments against the HHS proposal, but the Swampiest of them all relies on an Obama-era blog post written by career staff at the Federal Trade Commission (FTC).

The FTC bloggers write that hiding prices from patients facilitates competition by causing providers to price lower than they otherwise would if they knew their competitors were charging higher prices. Their tortured theory is that the fiercest competition occurs, not when sellers openly compete on price in a transparent market, but rather when sellers all aim low out of fear that a competitor is secretly undercutting them.

If that were true, we would expect to see a race to the bottom in health care prices, as hospitals scramble to undercut each other. Instead, hospitals increasingly gouge their information-starved patients, while insurers profit from the spoils.

The FTC bloggers cited by the industry groups also argue that widely disclosed prices facilitate easier collusion among market actors to fix prices collectively. This is like saying that glass storefronts facilitate looting by tempting looters with a better view of what they might steal.

Well, yes, but the solution is to enforce the law, not paint every window black. Is the FTC advocating for an end to public prices at grocery stores, movie theaters, real estate listings and every other industry, because of all that intolerable collusion going on out there?

FTC staff should be chagrined at being used by the medical industrial complex to defend the seeming financial abuse of patients. Wage growth of 26 percent in the last decade has been totally dwarfed by a 55 percent increase in health-care prices. Studies consistently show that those prices bear no predictable relationship to quality. The FTC should join the rest of the Trump administration in looking out for the market interests of patients and end secret health care prices once and for all.

Katy Talento is a health-care consultant and recently left the White House, where she served as the top health policy advisor to President Donald J. Trump on the Domestic Policy Council.