Healthcare Stimulus Lacks a Major Taxpayer Protection

Posted: Mar 28, 2020 12:01 AM
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Healthcare Stimulus Lacks a Major Taxpayer Protection

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The $2 trillion coronavirus stimulus deal that the Senate passed this week includes $100 billion for hospitals. Senate Minority Leader Chuck Schumer is calling these funds "a Marshall Plan" for the health care system.

Yet unlike the post-WWII Marshall Plan, these healthcare stimulus dollars come with little accountability to ensure they're used efficiently. 

First, some credit where it's due: Policymakers agreed to language in the legislation that requires providers to publish cash prices for coronavirus tests online, so patients and employers can easily shop around for the best deal. Clear market prices for tests will offer taxpayers some protection by providing a powerful check on providers' ability to dramatically inflate their diagnostic rates once insurers are required to cover them at no cost. The days of $9,000 coronavirus tests are over. 

Yet legislators didn't follow the courage of their convictions for coronavirus treatments, costs for which will dwarf those of tests. Congress should have taken President Trump's suggestion made on Tuesday and included a broad price transparency requirement in the legislation. Clear market prices for coronavirus treatment can provide Americans with much-needed protections from hospitals and insurance companies profiteering off the stimulus. 

Price transparency is a transformational reform that can deliver all Americans a healthcare system they can trust, providing them with the financial certainty that they need now more than ever. Congress can correct its oversight in future legislation by expanding the price transparency requirement for tests to treatments and, ultimately, all hospital services. 

Requiring healthcare providers and insurers to reveal their real prices before treatment imposes discipline on them to act efficiently – protecting taxpayers from price gouging and waste. Clear prices will create a market for treatments, putting downward pressure on costs. Price transparency arms patients with the information they need to be in control of their own healthcare choices and spending, a dynamic that will reduce the cost of care and insurance coverage. 

Consider the status quo. Time magazine recently reported on a Boston woman named Danni Askini who was charged $35,000 for coronavirus treatment in the emergency room. She received her bill in the mail days later. "I was pretty sticker-shocked," said Askini. "I personally don't know anybody who has that kind of money."

According to a new analysis by the Kaiser Family Foundation, the average projected cost of coronavirus treatment for patients with employer insurance is $9,763. For patients with complications, the price will be roughly twice as much. 

If hospitals can get away with charging such inflated amounts for treatments, then they will run through their vast stimulus funds very quickly. Price transparency is needed to punish this kind of price gouging. 

Price transparency will also reduce waste, which a recent JAMA study concludes accounts for one-quarter of healthcare spending. Without the discipline of prices, healthcare providers aren't punished for waste like their counterparts in other economic sectors. They can simply tack the bloat onto patients' bills after treatment without the repercussions that would occur if hairstylists or accountants tried something similar. 

The $35,000 cost at a Boston ER for uncomplicated coronavirus treatment is just more evidence that cash prices are far less expensive than healthcare's Kabuki theater pricing status quo. According to recent research by Vanderbilt University economist Larry Van Horn, cash prices are on average 39 percent less than insurers' negotiated rates. 

No wonder the public overwhelmingly supports government requirements for healthcare price transparency, with 88 percent of respondents in favor, according to a recent Harvard-Harris poll. No one likes the surprise billing, astronomical costs, and financial ruin associated with the current opaque system. 

Fortunately, price transparency legislative language already exists. Last November, the Trump administration issued a final rule requiring hospitals to publish their real cash prices and secretly negotiated rates. They also issued a similar proposed rule for insurers. This language merely needs to be adopted into Congress' next legislation. 

Hospitals and insurers fiercely oppose these price transparency efforts because they would eliminate their ability to price gouge. Hospital associations have sued to block the implementation of the rules. Yet by passing them legislatively, these legal challenges would be extinguished. 

Unprecedented stimulus relief must be paired with strong taxpayer protections to ensure the funds go to their best uses. For the healthcare-related portion of the stimulus, the strongest safeguard is making the money conditional on price transparency not only for testing but also for treatments. Price transparency is not just "a great issue," as President Trump noted, but a transformative one that can restore trust in the nation's healthcare system.