Price Transparency

Lack of price transparency is one of the major reasons for the out-of-control increases in healthcare costs we’ve been seeing in this country for the last several years. For many healthcare services, you often don’t know the cost until after the service is performed. In fact, even if you want to know the cost, you often can’t get it. Try calling your local hospital and asking for the all-in cost of a hernia operation (as our friend and benefit consultant David Contorno did) or a colonoscopy or a head CT. Even the employees answering the phone don’t often know. They can sometimes quote you a cash price from their charge master, but figuring out how much of that you’ll actually owe is incredibly difficult. Because you often can’t figure out how much the same service costs at different hospitals, you can’t comparison shop. This leaves hospitals free to ignore market forces and raise prices without fear of losing customers.

The Trump administration has just taken a step to correct the lack of transparency in our healthcare system by issuing an Executive Order on June 24, 2019. This Executive Order instructs the government to do the following:

1. Create regulations that require hospitals to post standard price information for the services they offer. These regulations are to mandate the disclosure of standard charge information for services, supplies, and any other fees that apply to the hospital and its employees.
2. Allow high deductible health plans (HDHPs) to cover low-cost preventive care, before the deductible, for medical care that helps maintain the health of patients with chronic conditions.
3. Expand the definition of eligible medical expenses under the Internal Revenue Code for HSAs to include expenses related to certain types of arrangements, potentially including direct primary care arrangements and healthcare sharing ministries, as eligible medical expenses under section 213(d) of title 26, United States Code.

We are especially excited to see #3 in this executive order. Dr. Phil Eskew does a great job outlining the faulty logic the IRS has used to improperly classify direct primary care membership fees. This will be a huge win for individuals and for the direct primary care movement.

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