The White House released an executive order Monday afternoon intended to require insurance companies, doctors and hospitals to give patients more information about precisely what their care will cost before they get it.
President Trump announced the new policy at a signing event, flanked by doctors and patients who had been hit by unexpected medical bills. The event came a week after the official launch of his re-election campaign, and it allows the president to make a claim that he is pursuing a far-reaching health reform plan, his answer to voter concerns about the high costs of care.
“We’re taking power away from bureaucrats, we’re taking it away from insurance companies and away from special interests, we’re giving that power back to patients,” he said, adding that the proposal would bring health care costs “way, way down.”
“We’re taking one more giant step towards a heath care system that is really fantastic.”
Mr. Trump was elected on a promise to repeal the Affordable Care Act, and he has continued to suggest that a plan to repeal the 2010 health law is around the corner, even after Republicans failed to pass several replacement bills in 2017. His attorney general is arguing in court that the entire law should be invalidated. But at Monday’s event, he sounded a more conciliatory note and said he had instructed the Health and Human Services secretary, Alex M. Azar II, to do “a great job” administering the Affordable Care Act.
The transparency order could upend the traditional business practices of major players in the health care industry by revealing price negotiations that have typically been kept secret. Insurers and medical providers negotiate discounted prices in private, and neither party wants competitors to know the details of the deals they’ve struck. The result is a market that can be opaque, with consumers frequently shocked at the prices of their care. President Trump and Mr. Azar say patients could avoid such unpleasant surprises if they could find out the cost of medical services in advance.
But the wording of the order, which delegates the details to regulators, also leaves ample room for modest forms of transparency that might rankle industry officials less.
There had already been strong pushback by industry groups over any proposal that would have forced them to detail all of their negotiated prices. Exactly what information hospitals and insurers will have to disclose is not specified in the executive order, which has no force of law on its own. White House officials said the details would be worked out during the rule-making process.
“It could have been much more aggressive,” said Paul Keckley, a health policy analyst and managing editor of the Keckley Report. “This reflects a lot of behind-the-scenes work by the trade groups.”
Hospitals and insurers have both argued that forcing them to disclose negotiated prices could distort rather than improve existing markets for health care. Many economists have raised similar concerns. “We would be very much opposed to disclosure of privately negotiated rates,” said Tom Nickels, an executive vice president at the American Hospital Association, in an interview before the executive order was issued.
Forcing the hospitals and insurers to disclose their agreements “has a chilling effect on negotiation — it could create a race to the top,” he said.
In an interview after the president issued the order, Mr. Nickels said the decision to go through rule making was “a positive move,” indicating that the administration was listening to concerns from the industry and others. “They have clearly invited or encouraged stakeholders to weigh in,” he said
The president became interested in the issue after hearing stories from patients whose finances were upended by high medical bills. And he sold the idea in populist terms, saying that increased transparency could help protect patients from a predatory health industry. He has also called for legislation to ban so-called surprise medical bills, when patients receive care from a doctor in the hospital who is not covered by their insurance; Congress is moving to answer that call.
Administration officials say they believe the order could result in substantial decreases in the cost of medical care. “Prices will go down, and patients will win,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, said in an interview. Ms. Verma emphasized that the order “specifically mentions negotiated rates,” rejecting criticism that the order was watered down.
The executive order will follow earlier administration actions to improve the transparency of health pricing data, including new requirements that drug companies disclose their list prices in consumer advertisements and that hospitals publish on their websites the prices they charge uninsured patients. (The drug companies are fighting the advertising rule in court.)
The data described in the executive order is different from hospital list prices made public earlier this year. Currently, hospitals must disclose what they charge, which represents the price they would like to receive.
But the executive order asks for disclosure of the actual prices insurance companies have agreed to pay health care providers for care. In many cases, patients themselves don’t pay that amount directly. But as health plans with high deductibles have become more common, more patients must pay these negotiated prices until their insurance kicks in.
Hospital executives say making information about how much the insurer pays for the care will not help people figure out how much they may owe. Requiring hospitals to disclose what they are paid by individual insurers would require an “incredible lift,” said Chip Kahn, the chief executive of the Federation of American Hospitals, which represents investor-owned systems. The executive order calls for patients to also get an estimate of their out-of-pocket costs before they get care.
It remains unclear how far the administration will go in making negotiated prices public. A senior administration official said that whether patients would have access to a full database of specific prices or something closer to a range of prices would be decided during the regulatory process. But both insurers and hospitals have objected to having what they describe as proprietary information made public, and they are expected to mount legal challenges to any mandated disclosure. In Ohio, a state law requiring price transparency remains mired in the courts two years after its passage.
How successful the administration will be may depend on what legal authority it can claim to make the changes. “No one should get credit for doing this until it gets done,” said Frederick Isasi, the executive director for Families USA, a consumer group.
The order will also ask government agencies to simplify the system of measuring and publicly reporting the quality of care provided by hospitals, doctors and others, enabling patients to more easily compare the performance of different doctors and hospitals alongside their prices.
Enthusiasts for greater price transparency say that making cost information public could increase market — and social — pressure on health care providers to lower prices. Some patients might be able to use the information to shop for their own care, when seeking a blood test or an X-ray, for example.
“I really firmly believe that once we get this transparency in place, the dominoes will fall for better quality, better price and better access,” said Cynthia Fisher, a health care entrepreneur and the founder of the group Patient Rights Advocate, who became interested in the issue after learning about friends and acquaintances who were harmed by high medical bills. Her group has produced videos of their stories, which the president has watched.
But others are more skeptical about whether pricing information alone will drive down overall costs. “Despite the tremendous bipartisan enthusiasm for the idea, price transparency has unfortunately not achieved the promise of helping patients price-shop or save money,” said Dr. Ateev Mehrotra, an associate professor at Harvard Medical School, who has studied earlier experiments.
Government officials also hope the data will be useful to employers, who typically rely on insurance companies to arrange their benefits without knowing all the details of the deals those insurance companies have cut. Even large employers with many workers have said that their insurance contracts have made it hard for them to see detailed pricing information or to be able to steer their workers to doctors and hospitals that are of high quality but cost less.
“The purchaser community has been pushing for transparency for years,” said Michael Thompson, the chief executive of the National Alliance of Healthcare Purchaser Coalitions, who praised the president’s actions. “The lack of transparency is a root cause of higher health care costs.”