The new year is nothing to celebrate for American patients, whose health insurance plans generally reset on Jan. 1. During this early part of the year, families must pay their first several thousand dollars of healthcare costs entirely out of pocket until they meet their annual deductibles and their insurance kicks in. This pre-deductible phase is especially painful for the increasing share of Americans on high-deductible health plans, which have more than doubled over the past decade.
These patients, along with the nearly 30 million Americans who lack health insurance entirely, have little to no protection from notoriously overcharging American hospitals. Many are an accident or routine health problem away from financial ruin or joining the ranks of the 100 million Americans with medical debt. These include patients who receive egregious hospital bills such as $5,000 MRIs and $100,000 knee surgeries that cost $250 and $18,000 at cash-based centers, respectively.
The best way for patients to protect themselves from such outrageous hospital bills is by exercising their right to actual, upfront hospital prices granted by a federal hospital price transparency rule that took effect on Jan. 1, 2021. By demanding to know the real price of care before it is delivered, healthcare consumers, including employers and unions, can shop for affordable treatment, avoid and fight rampant hospital overbilling and enjoy financial peace of mind.
The price transparency rule requires hospitals to publish online their discounted cash prices and all negotiated insurance rates by plan. Tech innovators can then aggregate these prices in consumer-friendly web applications like Kayak and Expedia. This will empower healthcare consumers to easily identify the well-documented wide price differences for the same care, even at the same hospital, and benefit from competition.
At one California hospital, for instance, the price of a C-section ranges from $6,200 to $60,600. When real prices are known, no consumer will tolerate paying10 times more for the same care as the person in the bed next to them.
Patients have had this right to real prices for two years, but most hospitals prevent them from exercising it by continuing to withhold their prices. A recent study by PatientRightsAdvocate.org finds that only 16% of hospitals are complying with the price transparency rule. Most are not publishing their prices by insurance plan as the rule requires, and some post no prices at all.
Hospitals make immense profits by keeping patients in the dark about prices. American “nonprofit” hospitals are sitting on more than $283 billion in financial assets that they invest via private equity, venture capital, and offshore accounts.
After blinding patients to prices, then blindsiding them with massive bills they otherwise may not have agreed to, hospitals engage in aggressive collections practices that make even payday lenders blush. According to a recent Kaiser investigation, more than two-thirds of American hospitals sue delinquent patients, resulting in home liens, garnished wages, and ruined credit. One-fifth of hospitals deny care to indebted patients.
To empower patients to fight back against predatory hospitals, the federal government can robustly enforce the price transparency rule by issuing financial penalties on noncompliant hospitals. But ultimately, patients must demand upfront prices to get hospitals to meaningfully release them. By refusing care without actual prices, patients can not only avoid price gouging, debt, and bankruptcy but also use their collective consumer power to force hospitals to finally turn over this information.
This time of year, when most patients have no insurance protection from hospital bills, marks the best opportunity to activate a grassroots movement of people to stand up for their right to real prices.
Cynthia A. Fisher is a life sciences entrepreneur and the founder and former CEO of ViaCord Inc.