As a small-business owner who kept costs low and health care premiums flat for 10 years in my company, I know firsthand that transparency is the trick to reducing the skyrocketing health care costs that are burdening patients, employers, and our state, local, and federal governments.
Tuesday, I am introducing the PRICE Transparency Act to bring long-overdue clarity to health care prices. Requiring hospitals and insurers to publish their real cash prices and secret negotiated rates before care will lower health care prices by providing health care consumers with the information they need to shop for the best value before care is delivered.
Under the status quo, hospitals and insurers can charge astronomical prices without losing customers -- something they couldn't do if prices were known.
Armed with pricing information, health care consumers can punish providers that price gouge, waste resources, or engage in surprise billing by taking their business elsewhere. Aside from true emergencies, most health care decisions are shoppable.
Clear prices force health care providers and insurers to lower their rates to attract customers -- like their counterparts in the rest of the economy.
Economic and anecdotal evidence suggest price transparency can reduce health care costs by 30 to 50 percent. I experienced these savings in 2008 after my business, which at the time employed 300 people, moved to a self-insured model and began contracting directly with price-transparent providers. We now have around 1,000 employees nationwide and premiums haven’t gone up a nickel: imagine the savings that my business and my employees were able to realize over those ten years.
Armed with pricing information, health care consumers can punish providers that price gouge, waste resources, or engage in surprise billing by taking their business elsewhere.
Research published by economists Larry Van Horn and Art Laffer finds that cash prices for health care are, on average, 39 percent less than the secret reimbursement rates that insurers pay. According to former House Speaker Newt Gingrich, the average family will save $11,000 if price transparency reforms take effect.
In contrast to the "Phase 4" COVID-19 relief bill backed by Congressional Democrats, the PRICE Transparency Act will boost the economy without costing taxpayers a dime. My fellow lawmakers can pass it as standalone legislation or include it as part of the next broader federal legislative package.
As unemployment rates remain high and Indiana’s tax revenues have fallen due to the pandemic-induced recession, many Hoosier households are tightening their belts and Gov. Holcomb has directed state agencies to cut their budgets by 15 percent.
Health care costs make up roughly half of Indiana's budget. Rising health care outlays for public employees and pensioners are increasingly diverting taxpayer dollars that should fund government services. Significantly reducing these costs would go a long way.
Patients and employers also need lower health care costs now. Many of the 760,000 Hoosiers filing for unemployment benefits over the past three months have lost health insurance. It will take many months for small businesses to get back to capacity; sadly, some will never reopen.
Employers who are trying to restore businesses from the recent economic devastation provide health coverage for 181 million Americans. Lower health care costs can give us more funds to rebuild, hire, raise wages, and expand.
Employees can have more money to spend on goods and services – rather than ever-increasing health insurance premiums. Taxpayers can be protected from public budgets getting swamped by a wave of healthcare costs.
Last November, the Trump administration issued rules requiring price transparency for hospitals and health insurance companies. The hospital regulation, scheduled to take effect in January 2021, is being challenged in court by hospital lobbies that sued to keep their prices and negotiated rates secret until after patients get care.
Hearteningly, last week the D.C. District Court upheld President Trump’s executive action on transparency, with the judge noting that hospitals “need to respond to a market where consumers are more empowered.” The PRICE Transparency Act would effectively codify these rules, which are supported by nine in ten Americans, and overcome these court challenges.
These desperate economic times call for courageous measures. My legislation to reveal real health care prices can boost government budgets, stimulate the economy, and put more money in Hoosiers' pockets. It can bring the kind of health care savings I was able to bring my employees in the private sector to all Americans.
Republican Mike Braun represents Indiana in the United States Senate.