President Donald Trump today signed an executive order that calls for hospitals to disclose to patients up front how much they charge for tests, surgeries and other procedures.
The goal of would be to let patients know how much hospitals charge for common procedures. Those prices are typically trade secrets between hospitals and the insurers they negotiate with.
The administration also wants to make medical providers and insurers give their patients estimates of out-of-pocket costs before they get care.
“We’re fundamentally changing the nature of the health care marketplace,” Trump said at the White House on Monday. “Prices will come down by numbers you can’t even believe.”
The actual text of the executive order leaves significant questions about how much price information would be made public. It orders the U.S. Department of Health and Human Services (HHS) to write regulations “to require hospitals to publicly post standard charge information, including charges and information based on negotiated rates,” in a way that consumers can understand. Those regulations should be proposed within 60 days, according to the order.
Health insurers’ share prices fell after details of the proposal were released earlier today. A subindex of insurance stocks closed down 1.1% in New York, underperforming the broader S&P.
Some details of the executive order were described earlier by Secretary of Health and Human Services Alex Azar, whose department will draft the regulations. The changes are likely to face significant pushback from the health care industry.
“Every day, American patients are being taken advantage of by a system that hides critical information from them,” Azar said on a conference call with reporters.
The health-insurance industry’s main trade group said the plan will backfire. “Publicly disclosing competitively negotiated, proprietary rates will reduce competition and push prices higher — not lower — for consumers, patients, and taxpayers,” Matt Eyles, president of America’s Health Insurance Plans, said in an emailed statement before the order was signed.
Eyles said the industry supports giving patients accurate information about their costs, but publishing negotiated rates would create “a floor — not a ceiling — for the prices that hospitals would be willing to accept.”
The Trump administration has advocated for bringing down health care costs by making prices more visible, boosting competition and reducing regulation. Trump has also called on Congress to pass legislation to stop surprise billing, while major pharmaceutical companies are revealing drug prices online in a bid to stave off pressure from the administration.