Earlier this week, President Trump announced an Executive Order requiring health care companies, particularly hospitals and insurers, to make their negotiated prices for services publicly available. Trump said, with his trademark understatement:
“This is a truly historic day. I don’t know if it will be covered that way by the fake news, but this is truly a historic day this is a very big thing that is happening right now and it’s pretty much going to blow everything away.”President Donald Trump, signing the Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First, June 24 2019
Since then, there’s been a slew of coverage about whether this order will have quite that impact. The hardcore health economists have been talking about Danish cement (seriously) in saying that forcing hospitals to publish what they’ve negotiated with health insurers to pay for services will simply encourage the ones charging the least to raise their prices. I personally asked an economist if the airline industry might be a better comparison, with its major players, barriers to entry and regional differences in supply and demand. Here’s what he sent me:
Here’s what this Executive Order on transparency could mean for the FI community: ultimately, smart and active consumers do better when they have more information, so this’ll be good for FI. Duh.
But health care has nuances—many, many nuances.(more…)