American hospitals are taking a scalpel to the hands that feed them. They have received $100 billion in coronavirus bailouts from the federal government, and they can draw on the $349 billion in rescue funds for businesses. At the same time, they have the gall to sue the government â to block new federal rules requiring them to come clean about their opaque prices.
Last week, hospital groups Ârequested virtual oral arguments in their lawsuit, which has been postponed by the outbreak. Meanwhile, congressional Democrats have demanded an additional $100 billion in hospital funding on the grounds that the original tranche wasnât enough to cover corona-induced costs.
While front-line heroes deserve our utmost gratitude, economically vulnerable taxpayers are more than handsomely rewarding the hospitals that employ health workers. In return, hospitals can show their Âappreciation by dropping their lawsuit against an eminently fair policy: price transparency.
Clear prices before care are the key to reducing out-of-control health costs. They will allow Âpatients and employers, which provide health coverage for 181 million Americans, to shop around for the best quality of care at the lowest price.
In a system with transparent prices, health providers will compete for business, just as any other business does, from Amazon to your local deli. Hence Team Trumpâs rule, Âissued last November, that requires hospitals to disclose their cash prices and secret rates negotiated among insurers.
Revealing this information threatens hospitalsâ sky-high revenues, which depend on a murky price model ripe for price-gouging, overbilling and waste. Hospitals deviously pass on these costs to powerless, often Âunsophisticated patients via bills weeks after treatment.
Clear prices will empower health consumers like they do in every other industry.
Hospitals are predictably hostile to this rule. They filed suit soon after Team Trump issued it. Their position is especially shameful when you consider how ordinary Americans have financed hospitals with eye-watering bills, massive tax breaks and now bailouts.
The novel coronavirus doesnât obviate the need for price transparency â it only reinforces it. The Trump administration has (rightly) announced that the government will shoulder the cost for coronavirus treatments for the Âuninsured. Congressional Democrats want a similar guarantee from health insurers for those in the private market.
But when payment is mandatory and prices are opaque, providers can jack up rates without repercussions. Price transparency for treatments provides accountability for hospitals, arming patients and Âemployers with the information they need to shop for value.
Critics of price transparency may argue that it is nigh impossible to compare prices amid emergencies. Wrong. They ignore the economic phenomenon known as proxy shoppers, in which only a small fraction of consumers need to shop to keep prices low for Âeveryone. Just like only a small portion of drivers shop around for gas, so only a fraction of patients need to compare hospital prices to drive down pricing nationwide.
Federal lawmakers partly recognized the power of price transparency in the last rescue bill by Ârequiring it for coronavirus testing. They should demand broad price transparency in subsequent bailout packages.
Better yet: Hospitals should drop their insulting lawsuit and do the right thing by disclosing prices. Taxpayers donât deserve to be taken to court by the industry theyâre rescuing.
While theyâre at it, hospitals should also drop their countless collections lawsuits against ordinary patients. Hospital systems routinely place liens on homes, seize bank accounts and garnish wages over outstanding bills. According to a Kaiser Health News examination, the University of Virginia hospital network, to take one example, sued past patients for unpaid bills for as little as $14 more than 36,000 times between 2012 and 2018.
Nine of 10 Americans support price transparency, according to polls. In return for their generosity, Americans should demand that hospitals restore patient and taxpayer trust in health care by posting real prices online in real time, creating a genuine market to give Americans the best bang for their (corona-strained) buck.
Cynthia Fisher, a life-sciences entrepreneur, is founder and chairman of PatientRightsAdvocate.org.