An MRI can cost $300 or $3,000, depending on where you get it. A colonoscopy can run you $1,000 to $10,000.
Economists cited these examples of the roulette wheel of health care prices in their request that Congress mandate hospitals and health providers be upfront about their prices for medical care.
Backers of the Health Care Price Transparency Act 2.0 hope the push by a group of influential economists will convince lawmakers to advance the Senate bill introduced in December by Sen. Mike Braun, R-Indiana. The measure, co-sponsored by 11 Democratic and Republican senators and Bernie Sanders, a Vermont Independent, has not advanced out of committee. Braun’s “top priority is getting this bill through committee and to the floor,” for a vote, said Allison Dong, Braun’s deputy communications manager.
In the letter Monday to senators, a group of 32 economists, academics and business leaders said price transparency would save up to $1 trillion in wasted medical spending each year and buoy middle-class workers “whose paychecks are being devoured by runaway healthcare costs.”
The economists argued that the cost savings to patients would invigorate the economy offering savings to workers whose wages have stalled because their employers are paying spiraling health care costs.
Vivian Ho, a Rice University economist who signed the letter, said the legislation would give employers and consumers price-comparison tools to shop for better health care prices. Letting consumers choose lower-cost hospitals, labs and same-day surgery centers will slow health spending and theoretically make health insurance cheaper, she said.
“A large portion of middle-class wealth in America is just locked up in hospital cash reserves,” said Ho, the Baker Institute Chair in Health Economics at Rice.
What would the price transparency bill do?
Hospitals are already obligated to disclose some price information. A federal rule that went into effect in 2021 requires hospitals to post the cash prices and rates negotiated with health insurers for a broad list of procedures in a computer-readable format so the information can be analyzed. The rule also mandates hospitals post estimates for at least 300 services so consumers can compare prices.
But critics say there are too many loopholes in the existing federal rule. They say the price estimator tool does not provide actual prices, and the machine-readable files are often riddled with incomplete, incorrect or non-functioning data. So far, 15 hospitals have been fined for failing to post prices, according to the Centers for Medicare & Medicaid Services.
The Braun bill requires health care providers to post computer files of all rates and cash prices negotiated with hospitals, health insurance plans, labs, imaging centers and same-day surgery centers.
These providers would have to provide actual prices – not estimates. And federal regulators would determine the format for reporting the data.
Health care executives would need to attest that all prices were accurate and complete or would face penalties. The penalties would be based on the hospital’s size. For example, a 500-bed hospital that refused to comply could face a penalty of up to $10,000,000.
Hospitals have said they’re worried that the legislation would eliminate the price estimates. They said requiring facilities to list actual prices might confuse consumers.
In a letter submitted to a Senate committee during a July hearing, the American Hospital Association said hospitals warned that eliminating price estimates would be a bad idea.
The hospitals said getting rid of price estimates would eliminate “a consumer-friendly research tool and unfairly penalize hospitals that have spent significant capital to comply with the regulation,” the hospitals said.
The hospitals added that list prices “may be difficult for consumers to navigate and will not reflect the different policies that their insurer may apply to determine the final price for a service.”
But employer groups say prices are more important than estimates. Employers who provide health insurance to working-age Americans need to see actual prices when sponsoring coverage for their workers.
James Gelfand, president and CEO of The ERISA Industry Committee, a trade group for employers, said price transparency will allow employers to make smart choices when choosing benefits for their employees and families.
“Transparency is critical to getting health care costs under control for employers and workers,” said Gelfand. “Senator Braun’s bill is the strongest health care price transparency bill because it doesn’t call for estimates – it calls for real prices to be disclosed.”
Other experts said consumers are comfortable shopping for health care when they know the prices. More consumer-friendly health vendors such as GoodRx, entrepreneur Mark Cuban’s Cost Plus Drugs and Amazon offer clear pricing information to consumers, said Ge Bai, a Johns Hopkins University professor of accounting and health policy and management.
She said enhanced price transparency would allow more consumers to shop and compare prices charged by different hospitals and clinics before they undergo a procedure. With 100 million Americans in –medical debt, having a tool like this could help consumers shop for better prices and avoid big bills.
“Consumers are going to want to control more of their health care dollars – and price transparency will help them,” Bai said.
Rising health costs erode workers’ paychecks
The economists said rising medical prices have forced employers and consumers to spend more on health care. The economists cited a 2023 Kaiser Family Foundation report that found the typical family health insurance plan costs nearly $24,000 per year, a 50% hike from a decade ago.
Because employers cover most of a health insurance policy’s expenses, companies have less money to hire more staff or hand out raises, Ho said.
Employers often don’t see how rising medical costs equal lower pay raises, but that’s the tradeoff companies make when calculating total compensation.
A study by Willis Towers Watson found 40% of the increased compensation that low-wage workers have earned since 2000 has gone to healthcare premiums, the economists said in the letter.
“Workers just don’t see this,” Ho said. “All you see is the take-home pay and you’re not thinking constantly about how much has been eaten up by premiums.”
