America heads closer to medical price transparency with new rule

America heads closer to medical price transparency with new rule
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It is official that health insurance companies across the nation will soon be mandated to disclose the real prices of their covered medical treatments and procedures. The new rule marks a huge step forward in medical price transparency and is estimated to assist over 200 million Americans.

Health Secretary Alex Azar said Americans have to be “able to work with their doctor to decide on the health care that makes sense for them” and that “those conversations cannot take place in a shadowy system where prices are hidden.” Americans will garner “vastly more control over their care” with lower costs and more choices promised by the president.

One upshot of the rule is no more surprise medical bills. Almost all health insurance companies will be mandated to disclose prices to enrollees for medical services and prescription drugs. They will have to post that vast information on an accessible and simple online public platform. This will allow consumers to access prices, including an estimate of their liability. The health insurance companies will also be mandated to disclose the in network negotiated rates, or what they pay to practitioners, and allowed amounts paid to out of network doctors and other medical services.


The rule also covers the prices and uncovered costs of prescription drugs. Consumers will also be able to receive this information in paper form. The transparency coverage program will be rolled out over three years. In this period, the health insurers have to make information for uncovered costs available for 500 medical items and services. They must have information available for all medical items and services by the end of this period.

This public data will be invaluable to consumers. It will also be useful to health policy researchers who examine the effects of different insurance benefit designs, provider payments, and delivery innovations with health care. This latest initiative has come with a broader policy initiative of the administration to reform the system with medical price transparency. It follows the hospital price transparency rule that will start in January.

The market for health insurance and the delivery of medical services has been distorted for decades. It has led to rising costs, uneven care, plus individuals and families unable to wield the leverage they routinely have as consumers in other sectors of the economy. Government policy, both at the federal level and the state level, has contributed to, and for some cases caused, these distortions. Individuals and families have paid high prices in declining choice and competition, a broken and concentrated market, and mysterious and sometimes very shocking medical bills.

Price transparency will not solve every problem in the health care system. It will, however, provide some welcome relief for individuals and families, notably from the threat of surprise medical bills. More importantly, it will empower consumers to secure the best value for their dollars, and force medical services to deliver more effective care at competitive rates.

As Labor Secretary Eugene Scalia observed, workers in employer health plans will now have access to information that “empowers them to shop and compare costs between specific providers before receiving care.” This is a refreshing change as our federal officials promote, instead of restrict, the critical economic principles of choice and competition.

Robert Moffit is a senior fellow in domestic policy at Heritage Foundation.