THE NEXT CRUCIAL STEP TO EMPOWER CONSUMERS AND CREATE A TRUE HEALTH CARE MARKETPLACE

The Transparency in Coverage Rule is a newly enacted, groundbreaking one that is a very real, “next-level” step toward giving consumers actual choice and control over how much they pay for health care. Unfortunately, it has received very little attention beyond a thoughtful January Forbes column by Wayne Winegarden.
I was involved in the rule’s development, so allow me a little evangelizing:

Winegarden clearly understood and conveyed the potential impact of the rule on employers and employees.  It requires health care plan sponsors (employers) to give 212 million consumers ready, geolocated access to the prices of virtually every medical test and procedure on the market so they can decide for themselves whether to choose, for example, an $800 MRI of the lower back or the $6,000 one being offered across town.  (The prices for an MRI of exactly the same quality can be that dramatically different, within a 10 miles radius—or less.  The price for the simple blood tests can vary 1,000 percent or more). The required consumer facing tool must also show anticipated out of pocket costs for the employee.

Companies that fail to comply with the rule by providing their employees geolocated, transparent pricing information can be fined $100 per plan member per day.  For a company with 2,000 employees, that can add up to over $400,000 in fines per day from the federal government when considering that each employee generally represents an average of 2.2 plan members, once spouses and children are considered.  More importantly, employers and their employees who do comply can save substantial costs by leveraging these new mandates to stop overpaying, on average, 41% for their care.

Bringing attention to this rule and it’s key role in a bigger picture effort helps validate a quest I have been on for several years to make the health care system a true marketplace in which consumers of health care services can rationally evaluate which health care provider to select based on both quality and pricing (often, by the way, the less expensive provider being the higher quality one).  

That quest took me to Washington, D.C. on more than one occasion to meet with key Trump Administration officials. I demonstrated my company TALON had developed software to unmask the hidden, often usury, pricing that health insurers happily pay to hospitals and other medical facilities. Health insurers do that because they can just pass all those inflated costs on to their subscribers—as increased copays and premiums—and their company profits actually go up.  

Unmasking this reality helped create the Transparency in Coverage Rule, followed by the No Surprises Act. They are truly bipartisan because the Trump Administration could not have made them a reality without key provisions of President Obama’s Affordable Care Act, and both the Rule and the Act are now being supported and implemented by the Biden Administration. Cooperation and bipartisanship has ruled the day in this case, believe it or not!

Great news indeed, but we’ve more to do. There are still many health care consumers that think that they don’t really pay for their healthcare according to price.  If their insurance “covers” their doctors’ visits, tests and procedures, price is no object, right?  Well, no.  Not at all.  That’s because the more folks spend on health care services the more their premiums rise.  And Americans might think that their insurance companies are negotiating for the lowest rates for those health care services to keep premiums low, but that just isn’t so.  In fact, insurance companies would generally rather pay more for tests and procedures.

Sounds crazy, right?  Why would insurers want to spend more on health care and drive prices through the roof?

The answer to that question is that another federal rule exists that we have to get rid of, as soon as humanly possible.  It’s called the 80/20 Rule.  The Obama Administration put the legal architecture in place that allowed the Transparency in Coverage Rule along with the less impactful Hospital Transparency Rule update (championed by the Trump Administration) to withstand cynical lawsuits from hospitals wanting to keep their prices secret.  It’s a rare and brilliant example of bipartisanship.  Now, the Biden Administration could take the next step in healing the health care delivery system by surgically removing the 80/20 Rule.  
Wiping out that rule is next up on my checklist for healthcare change.  More on that next time.

Mark Galvin, serial entrepreneur, is Founder & CEO of TALON.