When I beat breast cancer in November 2022 and entered full remission, I had incurred at least $25,000 in expenses over seven months to save my life. What sticks with me to this day is not just the price tag and all the hidden costs absorbed by my insurance, but the number of times I had to pay bills for screenings I’d never been told the cost of. “Scan now, pay later” is how I’d characterize it. That lack of transparency is overly familiar to many Americans.
Thankfully, removing some of the unpleasantness around billing is one of the few issues of bipartisan agreement in Washington, because with 100 million Americans experiencing medical debt, it’s an issue that touches every corner of the country. Progress has been made toward transparency, but one simple step has been neglected in forcing hospitals to finally come clean on their prices.
Currently, a huge number of hospital systems are stonewalling price transparency rules, inflating costs, and undermining genuine efforts to make healthcare more affordable for patients. When the healthcare system is linked to over 60 percent of personal bankruptcies each year, the shadiness around billing looks even more egregious. In almost every part of the economy, consumers are told what something costs before they buy it. Yet in healthcare, where life-or-death service bills can easily hit five or six figures, hospitals continue to hide the ball.
President Trump started the ball rolling with two major price transparency rules, which became effective in January 2021. They were supposed to address this “sticker shock” by requiring hospitals to post “clear, machine-readable prices” for common services.
Compliance has been suboptimal, to say the least, as the Journal of the American Medical Association analysis found that fewer than six percent of hospitals were compliant, and the Department of Health and Human Services also found daunting shortfalls in adherence to federal policy.
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Those that do comply do so minimally, while still burying pricing files in unusable formats that might as well be invisible to patients. Insurers negotiate blindly with hospitals that keep an upper hand throughout the process and inflate prices with zero accountability.
Some of the most egregious offenders are nonprofit hospital systems, which now dominate the American healthcare landscape. These hospitals enjoy generous federal tax breaks, state and local subsidies, access to Medicare and Medicaid reimbursements, and in many states, have their business protected by Certificate-Of-Need (CON) laws that block new competitors from entering the local market. In exchange for certain privileges, nonprofit hospitals are supposed to deliver community benefits and operate in the public interest.
Instead, many behave like tax-exempt conglomerates that hoard profits and hide their prices. Of the 28 enforcement actions taken by CMS since 2022, related to President Trump’s transparency rules, 65 percent are against nonprofit institutions, and only 10 involved private for-profit medical institutions.
The anger Americans feel toward the healthcare system is no secret, but the administrative bloat in nonprofit hospitals driving U.S. healthcare spending, very much is.
The U.S. spends more than $4 trillion on healthcare every year, with 15 to 25 percent of that going straight to administrative costs. Price transparency threatens this bureaucratic ecosystem so prevalent in the world of nonprofit hospitals.
It also happens to be the case that patients paying out of pocket are usually the biggest victims of opaque pricing. They deserve to understand what costs a hospital charges, to allow them to compare different providers and make an informed decision.
When I got my cancer diagnosis in April 2022, I didn’t have health insurance, so I started off paying out of pocket for everything while I waited for coverage to begin. Paying up-front like this was cheaper than I expected, roughly $15,000 to start, and that is primarily owed to having no administrative middle-men in the process.
Once my Marketplace health insurance kicked in, I had to pay another $10,000 in premiums & deductibles, with bills coming in all at once. MRI scans were among the most distressing parts of the process, because the cost was a mystery. If my deductible wasn’t yet met, the cost would be around $2,500, partially paid in advance, with no full price disclosure until the week of.
Both sides of the political aisle in Washington say they want to lower healthcare costs for Americans, and that starts with upping enforcement by the administration, with special attention paid to the shady nonprofit sector. Senator Roger Marshall (R-Kansas) rightly pointed out that a better healthcare system is one where we can actually call patients: consumers.
A consumer knowingly pays for a product or service, but a patient is often simply trapped in a situation of need. Fix this dynamic, and you can make significant improvements in American healthcare.
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