Updated 4:03 p.m.
President Trump signed an executive order Monday on price transparency in health care that aims to lower rising health care costs by showing prices to patients. The idea is that if people can shop around, market forces may drive down costs.
"Hospitals will be required to publish prices that reflect what people pay for services," said President Trump at a White House event. "You will get great pricing. Prices will come down by numbers that you wouldn't believe. The cost of healthcare will go way, way down."
Like several of President Trump's other health policy-related announcements, today's executive order doesn't spell out specific actions, but directs the department of Health and Human Services to develop a policy and then undertake a lengthy rule-making process.
"The president knows the best way to lower costs in health care is to put patients in control by increasing choice and competition," HHS Secretary Alex Azar said at a phone briefing for reporters Monday morning.
Azar outlined five parts of the executive order, two of which are directly related to price transparency.
It directs the agency to draft a new rule that would require hospitals to disclose the prices that patients and insurers actually pay in "an easy-to-read, patient-friendly format," Azar said.
The new rule should also "require health care providers and insurers to provide patients with information about the out-of-pocket costs they'll face before they receive health care services," he added.
The idea is simple. Health care is an industry where consumers don't have access to the kind of information they have when making other purchasing decisions. The executive order could — if it leads to finalized, HHS rules — pressure the industry to function more like a normal market, where quality and price drive consumer behavior. Some consumer advocates welcomed the move.
"Today patients don't have access to prices or choices or even ability to see quality," said Cynthia Fisher, founder of a group called Patient Rights Advocate. "I think the exciting part of this executive order is the President and administration are really moving to put the patient in the driver's seat and be empowered for the first time with knowledge and information."
Exactly how the rules the executive order calls for would work is still to be determined, administration officials said.
Push back from various corners of the healthcare industry came quickly, with hospital and health plan lobbying organizations arguing this transparency requirement would have the unintended consequence of pushing prices up, rather than down.
"Publicly disclosing competitively negotiated, proprietary rates will reduce competition and push prices higher — not lower — for consumers, patients, and taxpayers," said Matt Eyles, CEO of America's Health Insurance Plans in a statement. He says it will perpetuate "the old days of the American health care system paying for volume over value. We know that is a formula for higher costs and worse care for everyone."
Some health economists and industry observers without a vested interest expressed a similar view. Larry Levitt, senior vice president for health reform the Kaiser Family Foundation, tweeted that although the idea of greater price transparency makes sense from the perspective of consumer protection, it doesn't guarantee lower prices.
"I'm skeptical that disclosure of health care prices will drive prices down, and could even increase prices once hospitals and doctors know what their competitors down the street are getting paid," Levitt wrote.
This executive order is the latest in a series of moves from the Trump administration on health care price transparency recently. As NPR reported, just last month the White House announced its legislative priorities for ending surprise medical bills, which included patients receiving a "clear and honest bill upfront" before scheduled care. That same week, HHS announced a final rule requiring drugmakers to display list prices of their drugs in TV ads.
However, several of President Trump's past health care announcements have gotten tied up before the promises to lower costs could be realized.
For instance, in May 2018, Trump rolled out a Blueprint To Lower Drug Prices which included a variety of proposals intended to reduce pharmaceutical costs to individuals, the industry and the economy as a whole, as NPR reported.
In October of last year, the Centers for Medicare and Medicaid Services proposed an international pricing model for setting what Medicare Part B would pay for certain drugs. This is the closest the Trump administration has come to Trump's campaign promise to have Medicare negotiate with drug companies.
The proposal was put out for public comment with a December 2018 deadline. Thousands of comments came in, including a lot of pushback from the pharmaceutical industry and the proposed rule has not yet been finalized and it's not clear it ever will be.
MARY LOUISE KELLY, HOST:
To another story now, the cost of medical procedures. The real cost is often a huge mystery to patients, and it can vary hugely from hospital to hospital. President Trump today signed an executive order he says will address that. It asks the federal government to draft rules requiring hospitals and insurers to post prices in a way that is easy for consumers to access.
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PRESIDENT DONALD TRUMP: And you'll get a great pricing. Prices will come down by numbers that you won't even believe. You won't even believe it. More price transparency will mean more competition, and the costs of health care will go way, way down.
KELLY: All right. We are joined now by NPR White House correspondent Tamara Keith. Hey there.
TAMARA KEITH, BYLINE: Hello.
KELLY: How exactly is this supposed to work?
KEITH: Well, the idea here is that more transparency will mean that patients can make more informed decisions about their care. They could choose a cheaper option, or they could choose a more highly rated provider. And for people with high deductibles or no insurance, this could make a difference in their daily lives. But the challenge here is that, even with a lot of information, it's hard to shop around in health care because you trust your doctor. You trust the person they tell you you should go see. Or it's hard because you're sick...
KEITH: ...And you're in a hurry, and you don't have time to shop around.
KELLY: I mean, the argument, as we heard President Trump making, is that forcing hospitals to publish their prices will lower prices, will create more competition - that we will all shop around. When you have spoken to health care experts and asked them, do they agree that this is what would happen?
KEITH: No, they don't necessarily agree that because health care is simply not a normal market. Price doesn't necessarily drive people in the same way that it would if you were shopping for a car or groceries.
KELLY: For the reasons you just mentioned.
KEITH: Right. Also, most people have insurance, and so they aren't price-sensitive in the same way. If you're paying a $30 copay no matter how much it costs, then it doesn't really matter. It doesn't drive your behavior. And the other thing, though, is that there are people, including in the industry and beyond, who are saying that this could have unintended consequences. The president is calling for the prices that insurers negotiate with hospitals to be made public, and a number of people have told me that this could actually cause hospitals and physicians to ask for higher reimbursements going forward.
Bill Pierce is a senior director at APCO Worldwide, but he's also a former HHS official under the George W. Bush administration. This is how he described it.
BILL PIERCE: Five doctors, five insurance companies - one guy is getting $200 for a physical, and the others are all getting 175. Everybody's going to 200 when the next negotiation comes. They're going to go, nope, want 200. That's a problem.
KELLY: Tam, just a few seconds left, but will we patients see changes along these lines soon?
KEITH: Not quickly because this is a rulemaking process. It is a long process. And then once this information becomes available, it's not clear whether the market effects will be what some expect.
KELLY: NPR's Tamara Keith, our White House correspondent. Thanks, Tam.
KEITH: You're welcome.
(SOUNDBITE OF HANDBOOK'S "BRONZES") Transcript provided by NPR, Copyright NPR.