U.S. President Donald Trump signed an executive order on Tuesday aiming to improve price transparency on healthcare costs by directing federal agencies to strictly enforce a 2019 order he signed during his first term.
The order directs the Departments of the Treasury, Labor, and Health and Human Services to, within 90 days, develop a framework to enforce Trump’s 2019 executive order mandating health insurers and hospitals to disclose healthcare cost details. This includes requiring the disclosure of actual prices rather than estimates, updating existing guidance or proposing new regulations to ensure price information is standardized, and updating or issuing enforcement policies that guarantee compliance.
“You’re not allowed to even talk about it when you’re going to a hospital or see a doctor. And this allows you to go out and talk about it,” Trump told reporters as he signed the order. “It’s been unpopular in some circles because people make less money, but it’s great for the patient.”
Trump’s initial 2019 order required hospitals to maintain a consumer-friendly display of pricing information for up to 300 shoppable services and a machine-readable file with negotiated rates for every single service a hospital provides. It also required health plans to post their negotiated rates with providers, their out-of-network payments to providers, and the actual prices they or their pharmacy benefit manager pay for prescription drugs, as well as to maintain a consumer-facing internet tool making price information accessible.
Many hospitals and insurance companies resist disclosing healthcare costs for several reasons:
- Negotiation Leverage – Hospitals and insurers engage in private negotiations to determine reimbursement rates. Public disclosure could weaken their bargaining power.
- Market Competition – Some providers fear that price transparency might lead to price-fixing or reduce competition by aligning prices across hospitals rather than encouraging lower costs.
- Profit Protection – Many healthcare entities benefit from complex and opaque billing structures that make it difficult for consumers to compare prices.
- Legal and Administrative Burden – Implementing transparency requirements necessitates compliance with new regulations, which can be costly and time-consuming.
The executive order could have significant implications for patients and healthcare consumers by:
- Empowering Consumers – With clearer pricing information, individuals can make more informed decisions about their care.
- Encouraging Competition – If patients can compare prices, hospitals and insurers may be pressured to lower costs.
- Reducing Surprise Bills – Transparency could mitigate unexpected expenses from out-of-network charges or hidden fees.
- Spurring Industry Pushback – Some healthcare organizations may attempt to find loopholes or resist compliance, potentially delaying the benefits.
Past administrations have made attempts at increasing healthcare transparency, though not as aggressively:
- Obama Administration: The Affordable Care Act (ACA) included some price transparency measures, but they were not as extensive as Trump’s orders.
- Bush Administration: President George W. Bush pushed for more consumer-oriented healthcare pricing but focused primarily on high-deductible health plans and health savings accounts (HSAs).
Healthcare pricing is influenced by multiple stakeholders:
- Hospitals and Providers – Set base prices for procedures and services.
- Insurance Companies – Negotiate discounted rates with hospitals and doctors.
- Government Programs – Medicare and Medicaid set reimbursement rates for covered services.
- Pharmacy Benefit Managers (PBMs) – Determine drug pricing and negotiate with pharmaceutical companies.
- Regulatory Agencies – Implement policies that influence pricing structures and disclosure requirements.
The executive order directs federal agencies to establish a framework within 90 days. However, full implementation could take longer due to:
- The need for regulatory changes and compliance guidelines.
- Legal challenges from healthcare organizations.
- Potential delays in enforcement mechanisms.
Despite opposition, if successfully implemented, the order could reshape healthcare pricing transparency, making it easier for consumers to navigate costs and make more informed healthcare decisions.
