Can Better Transparency in Healthcare Save Us From the Disaster of So-Called Medicare for All?

In 2021, NPR reported on Kyunghee Lee, a Cleveland resident who needs regular steroid injections to treat arthritis in her hand. The cost of each round had been a perfectly manageable $30 for years. Then her doctor’s office moved up one floor in the medical building, and the price exploded.

Her total bill for one treatment was now $1,394, which included a $1,262 facility fee listed as "operating room services." After insurance, Lee's portion was $354 – 10 times what she had paid before.

How could this happen? Under current law, providers are allowed to charge “hospital” rates even when services are rendered at an off-campus location. This antidote for this problem is called site-neutral pricing, which we’ve discussed before. Legislation advancing site-neutral reforms has lingered in Congress, lolling about in committees, not making it into a must-pass legislative package. But there’s some good news on the horizon: Now, the private sector is doing what it does best, and taking the lead to save patients money.

At a recent Make America Healthy Again (MAHA) summit in Washington, DC, headlined by Health and Human Services Secretary Robert F. Kennedy, Jr., and featuring MAHA alliance members, employer insurance industry group ERIC, and insurance trade group AHIP, insurance provider Elevance Health announced new transparency policies to draw a line under this overcharging by providers.

Specifically, the company will require providers to clarify where patients receive care, so services are paid at the correct rate: No more hospital fees for non-hospital services. In addition to care provided directly to patients, Elevance’s new policy will apply to certain lab tests performed off campus that are still billed at the higher, hospital rate.

For now, these changes are specific to Elevance plans. But were this policy to be applied across our entire healthcare system, the cost savings would be enormous. According to a Blue Cross Blue Shield Association study, when services were delivered in hospital outpatient settings rather than physician offices, patients paid an extra $411 million out of pocket, while Medicare paid an extra $2.7 billion, over three years.

That’s big money! And making healthcare within the (mostly) non-socialized system we have more affordable will be key to staving off Democrats’ pie-in-the-sky Medicare for All plan – which would inevitably make the healthcare Gordian knot even more byzantine, wasteful, and exploitable. Right now, support for Medicare for All is increasing in public opinion polls. That trend is directly tied to healthcare affordability. But the shift unveiled at the MAHA Summit shows there is a free market approach to cutting that particular Gordian Knot.

Now some will say that insurers are effecting this kind of change only to stave off future, more aggressive regulation. Both populist Republicans and so-called progressive Democrats view insurance companies with distrust. Given that “politics makes strange bedfellows,” if the two camps were looking for a bad guy to join forces against, insurers could make a nice target.

But fundamentally, the problem of high health insurance prices comes down to healthcare providers, what they charge, and where they engage in dishonest practices like billing a hospital setting price for a service delivered in a doctor’s office or other non-hospital locale. Ultimately, the goal is to stop $1,400 charges being levied for what had long been a $30 treatment. And conservatives believe the market should be empowered to drive prices lower, which is what has happened here. The biggest issue now seems to be that other insurers have not yet followed Elevance’s lead, and that Congress hasn’t passed a site-neutral law to benefit patients even when their insurer is late to the site-neutral party.

For patients with other plans, it’s worth remembering that some states have already increased legal requirements to curtail off-campus price exploitation, and new federal government rules requiring greater transparency will kick in come 2028. So help is on the way—though it would arrive vastly sooner if site-neutral payment reforms were prioritized in Congress.

With doctors exploiting the status quo and costing patients $411 million and Uncle Sam $2.7 billion, let’s hope that our federal legislators get on the case—or that the rest of the insurance market follows Elevance’s lead. The Medicare for All push is coming in earnest, and Americans are desperate for affordability solutions today.

Jared Whitley is a longtime DC politico, having worked in the US Senate, White House, and defense industry. He has an MBA from Hult business school in Dubai. This year, the Society of Professional Journalists named him among the best columnists in the Intermountain West.

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