View from Washington: Out in the Open

The political window is ready for price transparency initiatives.

Healthcare costs represent 16 percent of the gross domestic product (GDP), and by 2015, it is expected to exceed 20 percent. The number of people lacking health insurance grows every year, estimated now to reach 45 million. The Medicare program is expected to be insolvent in 2018. Private health insurance premiums have risen 73 percent over the past five years. Given these alarming facts, it should not be surprising that controlling healthcare costs is a top priority for employers, hospitals and lawmakers alike. To address this issue, many believe consumers should be able to shop for healthcare similar to how they purchase other basic needs such as food, housing, clothing and transportation.

Publicly publishing the prices of medical procedures, prescription costs and other related healthcare needs has been the topic of discussions in Washington. Price transparency programs are to assist providers in benchmarking their performance, encourage rewarding of quality and efficiency and to offer consumers more opportunity to manage their own healthcare dollars. However, making healthcare prices widely accessible is complicated. This past March, the House Energy and Commerce Health Subcommittee held a hearing to explore price transparency initiatives.

Problems identified at the hearing included limited quality information being available, the need is often urgent, treatments are complex and patients heavily rely on their physicians to determine whether to undergo a procedure and where care should be given. Although both Democrats and Republicans believe the concept of disclosing prices is good, they disagree on the policy’s potential to rein in costs and provide relief for the average consumer or the uninsured.

Lately, many proposals on Capitol Hill seem aimed at increasing competition for consumers. Maybe there is a window of opportunity for rationale debate on price transparency issues as well.

Department of Health and Human Services Secretary Michael Leavitt announced in March that cost and quality information will be collected for the 20 most commonly performed procedures to let the public see the prices charged by hospitals and physicians. Date was made available June 1.

The Bush Administration is asking insurance companies to increase healthcare transparency by providing their negotiating prices and quality information to their enrollees. The administration will also be requiring transparency from insurance plans participating in federal programs. Beginning this year, the Federal Employees Benefit Program and the military’s Tricare system are asking contractors to provide price and quality information.

At the American Hospital Association’s Annual Meeting in early May, President Bush called upon hospitals to voluntarily publish pricing and quality information. “If everyone here cooperates in this endeavor we can increase transparency without the need for legislation from the United States Congress,” said Bush.

The House Joint Economic Committee also explored price transparency issues at a May 10 hearing.

Respectfully, I would have to disagree with the President. I do think Congress will have to engage in bipartisan policymaking to make price transparency in healthcare a reality. The window of public policy opportunity appears to be slightly open on this issue right now. To reach a successful conclusion, policymakers will have to check the heavy and raw political armaments they normally carry to squeeze through this window of opportunity to do something potentially very positive to address escalating healthcare costs.

Robert Betz Ph.D. About Robert Betz Ph.D.

Robert Betz, Ph.D., is president of Robert Betz Associates, Inc. (RBA), a well-established federal health policy consulting firm located in the Washington, D.C. area. Additionally, Dr. Betz is an adjunct professor teaching at The George Washington University where he specializes in political science and health policy. For more information about RBA, visit www.robertbetz.com.

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