Trump to Force Hospitals to Reveal Prices

Trump to Force Hospitals to Reveal Prices

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Plus, rethinking the debt threat
Friday, November 15, 2019

Trump Issues Rule to Force Hospitals to Reveal Negotiated Prices

The Trump administration on Friday released the final version of a rule forcing hospitals to publicly disclose the prices they negotiate privately with insurers or face fines. The rule, which would take effect in 2021, is intended to improve transparency in a system that officials say in now clear as mud, increasing competition and better enabling consumers to shop for hundreds of medical items and services, including procedures like X-rays and lab tests, doctor care and facility fees.

The administration already requires hospitals to publish list prices, but the new rule would go further by requiring hospitals to post prices paid by various insurers, prices for out-of-network care and charges for patients paying in cash.

The administration also proposed a second rule requiring insurers to allow patients to get estimates of their out-of-pocket costs before they receive care.

“President Trump has promised American patients 'A+' healthcare transparency, but right now our system probably deserves an F on transparency,” Health and Human Services Secretary Alex Azar said in a statement. “Today's transparency announcement may be a more significant change to American healthcare markets than any other single thing we've done, by shining light on the costs of our shadowy system and finally putting the American patient in control.”

Will this kind of transparency work? “Administration officials, employers and others have criticized hospitals and insurers for keeping the deals they strike a secret, making it challenging for patients to seek less expensive places to get care,” writes New York Times reporter Reed Abelson. “They argue that by making it easier for people to find the actual prices that insurers pay — and not just the standard list prices for various services, which the Trump administration started requiring hospitals to post earlier this year — hospitals will be under more pressure to compete on prices.” Implementing the changes is likely to cost hospitals less than 1% of their revenue, an administration official said according to CNBC.

But health-care experts say it’s not clear whether hospital price transparency will actually lead to lower prices for patients, and some warn there’s a chance that increased transparency will backfire, resulting in some lower cost hospitals raising prices when they see what others charge. The proposed rule for insurers says that, “while the Departments are of the view that the overall effect of this proposal would lower health care costs, the Departments recognize that price transparency may have the opposite effect because in some markets where pricing is very transparent, pricing can narrow and average costs can increase.”

The plan doesn’t have much bite: “While the Trump administration's new hospital price transparency requirement is quite sweeping, the enforcement of it is quite weak -- a maximum fine of $300 per day,” said Larry Levitt of the Kaiser Family Foundation, a nonprofit focused on health care. “The technical term for that is ‘chump change.’ I wonder how many hospitals will just pay the fine.” New York Times health care reporter Sarah Kliff noted that the daily fines work out to a maximum of $109,500 a year. “To put that in perspective: at some hospitals, they can make up that revenue with five MRI scans,” she said in a tweet.

Levitt added that the proposal requiring insurers to disclose how much their enrollees would owe for medical services may be much more meaningful to patients.

Hospitals and insurers will fight back: Both industries object to having to disclose what they see as proprietary information. America’s Health Insurance Plans, an industry group, criticized the rules in a statement Friday and four major hospital organizations — the American Hospital Association (AHA), Association of American Medical Colleges (AAMC), Children’s Hospital Association (CHA) and Federation of American Hospitals (FAH) — quickly promised to challenge the administration in court.

“Instead of helping patients know their out-of-pocket costs, this rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovations in value-based care delivery,” the groups said in a joint statement. “Because the final rule does not achieve the goal of providing patients with out-of-pocket cost information, and instead threatens to confuse patients, our four organizations will soon join with member hospitals to file a legal challenge to the rule on grounds including that it exceeds the Administration’s authority.”

Warren Explains How She’d Transition to Medicare for All

Sen. Elizabeth Warren unveiled on Friday a multi-year plan to transition to Medicare for All, outlining a series of immediate reforms on a path toward a universal, single-payer health care system.

In her new proposal, Warren defended Medicare for All as “the best way to cover every person in America at the lowest possible cost” while addressing the increasingly pressing question, “how do we get there?”

Warren said she would seek to pass major health care legislation in her first 100 days as president that would significantly expand insurance coverage and take steps to start reducing costs. Americans over the age of 50 would be given the option of joining a more generous version of Medicare, and a pubic insurance option for people of all ages would compete with private, employer-based insurance plans. All American children would be covered, as would everyone with income below twice the poverty level. Adults earning more than that would pay “modest” fees to participate.

Warren’s plan includes numerous provisions intended to reduce costs and complexity, including anti-corruption reforms, limits on lobbying and new rules governing drug prices. The Massachusetts senator also vowed to “reverse Trump’s sabotage” of the Affordable Care Act and to strengthen Medicare and Medicaid.

Legislation to complete the transition to Medicare for All would come “no later than my third year in office,” Warren said. “By this point, the American people will have experienced the full benefits of a true Medicare for All option, and they can see for themselves how that experience stacks up against high-priced care that requires them to fight tooth-and-nail against their insurance company.”

The bottom line: Warren’s transition plan seems designed to blunt one of the main criticisms of her Medicare for All proposal — namely, that it would suddenly eliminate private insurance for about 150 million people, in a move that some Democrats worry could be too radical for voters. Nevertheless, Warren still faces potential pressure from progressives to her left, who want to hear clear and unambiguous support for the creation of a single-payer system, and more moderate voters to her right, who may still worry that her plan represents too sweeping a change.

“Warren is trying to thread a very tricky political needle here,” said Levitt of the Kaiser Family Foundation. “Warren clearly still supports Medicare for All, but she is not putting all of her eggs in that basket.”

Warren’s Taxes Could Add Up to More Than 100%

The Wall Street Journal’s Richard Rubin says Elizabeth Warren’s proposed taxes could claim more than 100% of income for some wealthy investors. Here’s an example Rubin discussed Friday:

“Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.”

In Rubin’s back-of-the-envelope analysis, an investor worth $2 billion would need to achieve a return of more than 10% in order to see any net gain after taxes. Rubin notes that actual tax bills would likely vary considerably depending on things like location, rates of return and as-yet-undefined policy details. But tax rates exceeding 100% would not be unusual, especially for billionaires.

Trump Wants South Korea to Pay Up for Protection: Report

President Trump is demanding that South Korea pay billions of additional dollars for U.S. protection, according to a report Friday by CNN.

South Korea is paying about $1 billion this year to cover the cost of keeping roughly 28,000 U.S. troops in the country, and Trump wants that to increase to $4.7 billion in 2020.

Officials at the Pentagon and the State Department aren’t sure where the $4.7 billion figure comes from, though they reportedly talked the president down from an even higher request of $5 billion.

Trump has long complained about the cost of keeping U.S. forces abroad, and last year canceled joint military exercises with South Korea in what was described as a cost-saving effort. Critics, however, worry that Trump may have other motives, perhaps related to his unusual relationship with Kim Jong-un, the dictatorial leader of North Korea who has continued to test missiles and maintain a nuclear arsenal, despite Trump’s claims to the contrary.

South Korean officials, along with many military and diplomatic experts in the U.S., expressed concerns that Trump’s demand could be seen as a shakedown, or the first step in an effort to withdraw U.S. troops entirely from the Korean peninsula. At a minimum it suggests that the U.S. will press harder to collect fees from a staunch ally where it has maintained troops since the Korean War.

A congressional aide told CNN that the relationship appears to be getting more transactional. “So if we had bombers stop by the peninsula as a show of force, I guess like an Uber driver, we would bill them for the trip,” the aide said. And South Koreans is wondering where that leaves their relationship with the U.S. The aide said that some Koreans are now wondering, “Are you guys mercenaries now? Is this a business arrangement?”

Rethinking the Debt Threat: House Panel to Hold Hearing Next Week

The House Budget Committee will hold a hearing next week examining the costs and consequences of federal debt, with four prominent economists slated to testify.

Ahead of the hearing, Democratic staffers on the committee issued a report arguing that “fears of an imminent debt crisis are misplaced” and suggesting that fiscal policy should be driven by meeting economic needs rather than by fears about debt and deficits.

“The federal debt as a share of the economy has more than tripled since 1980 and now sits at its highest level since just after World War II,” the report says. “However, we have seemingly evaded many of the predicted negative consequences of high and rising debt. These developments have motivated economists to reassess the economics and impacts of government debt and deficits in our current era.”

The report makes several key arguments:

Recent economic experience has defied textbook theories about debt. Even as the debt has soared, interest rates have fallen and are expected to stay low. “Today, with publicly held debt at 79 percent of GDP, the United States pays a significantly lower interest rate on a 10-year loan than it did 20 years ago – when the government was running consecutive budget surpluses and debt fell to 34 percent of GDP.”

Low interest rates make debt and deficits less costly: “Despite their critical differences, both mainstream and alternative schools of thought increasingly agree that government debt appears to be less risky, less costly, and less cause for immediate concern than conventional wisdom suggests.”

We should be focused on priorities besides debt reduction: “Failing to tackle severe and persistent infrastructure, education, and health outcome deficits is arguably more damaging to our economic and fiscal outlooks than the risks posed today by higher debt. … Additionally, with interest rates low, these investments are cheaper to make today and are likely to provide a bigger boost to the economy.”

But deficits still matter and should be addressed long-term: “Because we cannot be sure that the economy will follow its projected path – and because no one knows the exact conditions under which debt may actually inflict serious economic harm – basic risk management principles clearly dictate limits on when and how we use deficits. Restraining deficits is also important given that growing debt may make policymakers more reluctant to respond to future economic downturns.” Even if there’s no near-term urgency to reduce the deficit — and some steps to reduce the deficit could actually harm the economy — an aging population and growing health-care costs do pose long-term challenges that will require higher revenue. “Addressing this revenue shortage can help relieve pressure on our long-term fiscal outlook and allow us to gradually return our debt to a sustainable path.”

And we should be wise about adding to the deficit now: “Deficits that support critical investments in families, communities, and environmental resilience – investments that improve current and future living standards and boost our long-term growth potential – are justified uses. So are fighting recessions and avoiding needless and destructive austerity traps. Tax cuts for the wealthy, however, are not.”

We’ll have more on the hearing next week. Until then, you can see the full report by House Budget Committee Democrats here.

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