Transforming Healthcare: Trump’s Executive Order on Price Transparency

Transforming Healthcare: Trump’s Executive Order on Price Transparency

President Donald Trump’s executive order mandating healthcare price transparency represents one of his most significant achievements during his initial months in office. This order is designed to enhance price transparency by requiring hospitals and health insurers to disclose actual prices for services, including discounted cash and negotiated insurance rates.

The initiative aims to protect patients from excessive charges and empower them to make informed choices. By encouraging competition, patients will find it easier to navigate healthcare costs effectively. By the end of this month, the Department of Health and Human Services and other relevant departments must implement rules that will strengthen and enforce systemic price transparency.

Launching a Healthcare Revolution

This move towards healthcare price transparency has the potential to revolutionize not only healthcare itself but also the broader economy. It represents a pro-worker, pro-growth policy with the primary goal of increasing worker compensation and enhancing business profitability. With greater access to price information, employers and unions will be better equipped to identify significant price discrepancies and create more affordable healthcare plans.

Understanding the Current Landscape

Under existing circumstances, the healthcare market remains flawed. Consumers often cannot access real prices prior to receiving care, creating a lack of visibility in this vital economic sector. Without this transparency, price variations for similar services can be astonishing. For example, a C-section may cost between $6,000 and $60,000, while an MRI can range from $450 to $6,500. Such discrepancies illustrate the need for a functioning marketplace, which, under the current environment, resembles a game of chance rather than a reliable economic system.

Price Variation: A Cause for Concern

For decades, health insurers have obscured prices and claims processes. This opacity fosters spread pricing, adversely affecting workers and employers alike. According to current data, the average annual cost of employer-sponsored health insurance for families is approximately $25,600, reflecting consistent double-digit growth each year. Research indicates that roughly equal portions of compensation gains for the average worker since 2000 have been absorbed by rising premiums, contributing significantly to wage stagnation.

Lack of Compliance: An Ongoing Challenge

Sadly, compliance with Trump’s earlier healthcare transparency rules has been inadequate. A recent study revealed that only 21.1 percent of hospitals nationwide fully adhere to the established guidelines. The Biden administration’s lack of enforcement exacerbated this situation, imposing merely 25 financial penalties on the multitude of hospitals failing to comply. Moreover, the rollback of the rule allowed for less rigorous price reporting, offering unverified estimates rather than necessary real prices. Health insurers have further complicated matters by presenting data disclosures in cumbersome formats that are almost impossible to navigate.

Boosting Compliance and Empowering Patients

The latest executive order strengthens enforcement mechanisms to improve compliance across the healthcare sector. By mandating the disclosure of actual prices, rather than estimates, patients gains the ability to shop for care with confidence. The order also extends transparency requirements throughout the system, standardizing data disclosure processes to facilitate meaningful comparisons.

Furthermore, the order enforces the provision of Advanced Explanations of Benefits by health insurers, as outlined in the bipartisan No Surprises Act previously passed. These explanations will inform patients about their financial responsibilities, providing clarity and peace of mind about potential healthcare expenses.

Empowering Employers and Strengthening Audits

This initiative also arms employers and unions with the tools they need to audit health plans effectively. By verifying claims payments against provider bills and posted prices, they can tackle spread pricing practices that result in excessive payments to intermediaries. Transparency will lead to savings that can be shared with employees in the form of lower premiums and improved wages.

Significant Economic Implications

According to a study published in the Journal of the American Medical Association, an estimated 25 percent of U.S. healthcare spending is attributable to waste and fraud. Experts estimate that comprehensive price transparency could save the economy approximately $1 trillion annually. Redirecting this sum back into wages and business investments would significantly stimulate economic activity.

Restoring Trust and Accountability

The introduction of healthcare price transparency marks a pivotal microeconomic reform in U.S. history. By fostering a competitive marketplace, it enhances consumer choice, accountability, and trust in the system. When price information is readily available, markets naturally become more functional, leading to reduced costs and increased wages.

President Trump’s executive order and the subsequent federal regulations to be released later this month are set to transform the healthcare landscape. By establishing genuine healthcare price transparency, this order may well cement Trump’s legacy as the leader who fundamentally reformed American healthcare.

Cynthia A. Fisher is a life sciences entrepreneur and the founder of PatientRightsAdvocate.org.