The House Committee on Energy and Commerce, Subcommittee on Health, held a legislative hearing last week on the bills H.R. 4700, the Transparency in All Health Care Pricing Act of 2010; H.R. 2249, the Health Care Price Transparency Promotion Act of 2009; and H.R. 4803, the Patients' Right to Know Act.

Representative Steve Kagen (D-WI), who is a medical doctor, is sponsor of H.R. 4700 and one of the witnesses at the hearing. Rep. Kagen said if H.R. 4700 were enacted, it would "help to establish a very competitive medical marketplace, allowing families to find the essential information necessary to make their health care decisions based upon the quality, the price and the service of available caregivers within their hometown area and even across the nation." Rep. Kagen described the problems of individuals trying to understand the prices for prescription medication and costs of surgeries. "There is no reason patients should be prevented from knowing the price of a pill before they buy it -- and knowing what the person in line in front of them is paying for the same prescription," Kagen said. "Only in health care is the price non-transparent."

Steven J. Summer testified on behalf of the American Hospital Association (AHA). He explained that meaningful information on pricing in hospital care presents challenges, for example where the same operation on one individual may be without complication, but on another patient have several complications, with changes in costs. Nonetheless, he said the AHA supported transparency policies such as making available to the public pricing information on frequent hospital services, inpatient services, insurance plan enrollees' expected out-of-pocket costs -- pricing information consumers want and would find useful in health care decision-making, and consumer-friendly pricing language.
Regina E. Herzlinger, Professor of Business Administration at the Harvard Business School, testified on the benefits of transparency: consumers get better value and encourage competition within insurers; insurers could have better cost control and positive change through auditing; quality improvements, such as lower infection rates; improved patient care, access to care, and patronage of providers who offer better information.

However, Mike Cowie, an antitrust partner at Howrey LLP in Washington D.C. and formerly of the Federal Trade Commission (FTC) explained the regulatory perspective. He said that the FTC and Department of Justice Antitrust Division opposed public disclosure of pricing. "Collusion among companies to raise prices is more likely in industries where pricing terms are known among competitors," he explained. He noted that the Congressional Budget Office "has recognized that mandatory posting of pricing terms may reduce incentives to discount." Cowie added that academic studies have found that publication of pricing terms leads to higher pricing.

More Industry Headlines