COVID-19 could be health care’s cure

June 9, 2020

AHA vs Azar lawsuit and next stimulus bill offer Americans 2 shots at winning transparency war

Americans had their day in federal court last month, as hospital groups faced off against the U.S. Government. That’s right, hospitals are suing the same government that just handed them a $175 billion bailout. 

The case (American Hospital Association et al v Azar) comes down to simply this: The ability for Americans to know the price of their health care before they get it, so they can shop for value, versus the hospitals’ desire to keep patients and prices in the dark, so they can continue to charge whatever they want.

I attended the remote hearing by phone to hear both sides of the argument. 

What triggered the lawsuit was the President’s Executive Order for health-care price transparency, which the Dept. of Health and Human Services followed with a ruling last November requiring hospitals and doctors to post their cash prices and negotiated contracted rates in an accessible format, by January 2021. In response, the hospitals sued. 

Their main argument -- that revealing secret, negotiated pricing agreements between hospitals and insurers would violate their First Amendment rights -- is a real reach. These prices aren’t confidential. They are revealed to patients in their "explanation of benefits" after their non-returnable medical services are rendered. We’re simply asking to know them beforehand. 

Price transparency, Mike Baer, the attorney for the Dept. of Justice representing Americans, argued, would create a competitive market that would drive health-care prices down and benefit all consumers. 

That’s putting it mildly. True, systemwide price transparency would fix much of what is broken in our overpriced, opaque health-care system. 

In a recent survey, 91 percent of Americans said they would like to be able to see the price of health care before they buy it. If patients could know the price of their care – the contracted rates as well as cash prices -- before they received medical treatment, they could shop and compare prices, and be empowered to choose the best value care for themselves and their families. They could purchase health care the way they buy cars, groceries or houses. 

They could know, for example, that having a baby at one hospital would cost them $5,000 and at another $42,000. They could shop for the price of a hernia repair through an app on their phones. Instead, every day Americans go into health-care settings without knowing what their non-negotiable bill will be until it arrives days later.

On a larger scale, if consumers could see actual prices, their value-driven choice would steer the market toward lower-cost providers, such as independent doctors, driving costs down through competition. When hospitals and doctors have to compete based on quality and price, they will figure out how to provide more affordable care. Hospitals, for instance, would have to reduce administrative glut. The facility fees they tack on would show up as the valueless added cost that they are, bringing those fees into question and ideally extinction. 

Health-care consolidation would slow as buying up medical groups became less lucrative. Finally, if we could see real prices, that sunshine would bring to light how nonprofit hospitals use out-sized Chargemaster prices on their 990s to inflate their community benefit figures, or how much "free" care they provide. Transparency might make them a bit more charitable.

Yet, as it stands, none of that can happen because of our opaque health-care system. One striking takeaway from the court hearing was seeing the lengths hospitals will go to keep their prices hidden, an indication of just how much they have to hide, and stand to lose.

Health systems and insurance companies spend hundreds of millions of dollars lobbying Congress to maintain the status quo. Last year the American Hospital Association, historically one of the top five spenders in Washington, paid $24 million to lobby Congress. Over the last 10 years, the AHA has spent almost $400 million on lobbying, according to the Center for Responsive Politics. 

COVID offers a second bite of the apple

At this moment, Americans have two opportunities to win the price transparency war. One is the DC District Court Judge’s decision. Whichever way that goes, however, it will likely be appealed, delaying justice. The second, swifter option lies in the next COVID-19 relief package, which the Administration and Congress are currently working on.

A vote on the stimulus bill is likely to happen in July. Language that would make real price transparency the law is on the table. Its addition would codify the executive order on transparency, and end the lawsuit.  

Patient advocates argue that since hospitals are getting $175 billion in COVID bailout money from taxpayers, they owe us – at the very least -- accountability on how they spend it. What’s more, this bipartisan ask would cost taxpayers nothing, and the savings would add $11,000 in real income to American households, according to economists studying the impact. 

Americans want price transparency. The Trump Administration wants it. Now it’s up to Congress. Despite how much money they get paid to vote otherwise, I hope they will support what 91% of Americans want and what this country needs to heal from much more than this pandemic. 

If price transparency became part of the next stimulus package, the lawsuit would end, and the free-market health-care system that Americans have long been denied could begin. And years from now we could talk about how our nation’s worst pandemic cured health care.

Marni Jameson Carey is the executive director of the Association of Independent Doctors, a national nonprofit, nonpartisan trade organization dedicated to helping reduce health-care costs by keeping America’s doctors independent. You may reach her at marni@aid-us.org.