One of the most glaring deficiencies in America's healthcare system is its lack of price transparency. For too long, the bottom-line price of everything from prescription drugs to MRI scans and in-patient medical procedures has remained a mystery to most consumers.
This is no accident. By obscuring this information, providers, insurers, and pharmacy benefit managers have insulated themselves from price competition — subverting the kinds of market forces that keep quality high and costs down in other markets.
But that might be about to change. In December, the House of Representatives passed the bipartisan Lower Costs, More Transparency Act by a 320-71 margin. The measure aims to make the prices of a range of treatments and healthcare services far more accessible to patients.
Now the bill will head to the Senate. The members of the upper chamber would be wise to continue to prioritize price transparency in healthcare as they consider the bill.
American healthcare spending is rising at an unsustainable rate. Since the beginning of this century, health costs have more than tripled, totaling $4.5 trillion last year.
Containing these costs without compromising access or quality will require our healthcare market to function as efficiently as possible. That can't happen without a serious effort to make prices more transparent.
The Lower Costs, More Transparency Act builds on a number of requirements established by President Donald Trump's 2019 executive order on Improving Price and Quality Transparency in American Healthcare. That order required hospitals to disclose both the insurer-negotiated rates and the cash prices of 300 services.
The bill passed by the Housein December codifies this provision. But it doesn't stop there. It places similar requirements on ambulatory surgical centers and diagnostic laboratories. And it forces group health plans to provide personalized information on the in-network rates it negotiates with providers as well as the prices of prescription drugs.
Just as encouraging, the bill shines some light on the secret dealings of pharmacy benefit managers (PBMs) — the middlemen insurers hire to negotiate with pharmaceutical manufacturers over whether to cover certain drugs and at what price.
Even though PBMs routinely extract price concessions from drug companies, they rarely reveal these rebates and discounts to consumers. Insurers often calculate patients' cost-sharing obligations based on an artificially high list price that has no connection to the net price their PBM has secured for them.
In some cases, a patient might be better off paying for a medicine out of pocket in cash than running the drug through their insurance plan and facing a steep copayment or coinsurance bill. But finding out whether that's the case can be difficult.
The Lower Costs, More Transparency Act doesn't attack such practices head-on. But it does make some modest progress toward dragging PBM practices out of the shadows. It would, for instance, ban PBMs from charging Medicaid more for a medicine than the price it negotiated with drug companies — a practice known as "spread pricing." And it would force these firms to disclose to employer health plans data about manufacturer rebates and drug acquisition costs.
The bill's "site neutral" payment reforms in Medicare could also bring some sanity to healthcare spending. Right now, Medicare pays more for a given service if it's delivered in a hospital than if it's delivered in a doctor's office. That makes little sense — and it incentivizes hospitals to buy up physician practices so that they can charge higher rates.
By eliminating these payment disparities, the reform has the potential to lower Medicare's costs — and help bring about the lower prices and higher quality that follow increases in competition.
Forcing providers and insurers to come clean about the prices they charge will place downward pressure on costs, make care more affordable for patients, and introduce a healthy dose of competition into a sector of our economy that sorely needs it.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.
© 2025 Newsmax. All rights reserved.