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One of President Donald Trump's most significant achievements during his first 100 days in office was his executive order requiring "radical" healthcare price transparency. The order doubles down on his first-term hospital and health insurance price transparency rules requiring the publication of actual prices of care and coverage, including discounted cash and negotiated insurance rates.
This information protects patients from overcharges and empowers them to reduce inflated costs through choice and competition. The executive order requires the Department of Health and Human Services (HHS), the Department of Labor (DOL), and the Department of the Treasury to issue rules strengthening, standardizing and enforcing systemwide price transparency by the end of this month.
Trump's healthcare price transparency effort will revolutionize healthcare and the entire economy. It's a pro-worker, pro-growth, free-market policy to boost worker paychecks and business earnings.
5.5 MILLION PATIENTS' INFORMATION EXPOSED BY MAJOR HEALTHCARE DATA BREACH
When employers and unions can access actual prices throughout the healthcare system, they can spot wide price variations for the same care, expose middle players driving up costs and design affordable health plans. They can share their savings with workers in the form of lower premiums and higher wages.
President Donald Trump''s healthcare Executive Order is aimed at a billing transparency. (AP Photo/Mark Schiefelbein)
Under the status quo, healthcare is fundamentally un-American. It is the only economic sector where consumers cannot see real prices before they buy.
No functioning market can exist under these conditions. As a result, prices for the same care can range by 10 times, even at the same hospital.
For instance, C-sections vary from $6,000 to $60,000 and MRIs from $450 to $6,500. That isn't a marketplace — it's Russian Roulette that allows Big Health to profiteer off patients' misery.
For decades, health insurers have hidden prices and claims information, facilitating spread pricing that robs workers and employers. Employer-sponsored family health plans now cost $25,600 annually and increase by double-digits each year. Research shows that about the same amount of compensation gains for average workers since 2000 has gone to premiums as paychecks, a major cause of wage stagnation.
Unfortunately, hospitals and health insurers haven't complied with Trump's first-term rules. According to a recent study by PatientRightsAdvocate.org, only 21.1% of hospitals nationwide are fully complying with the hospital rule.
The Biden administration didn't meaningfully enforce the rule, issuing only 25 financial penalties on the thousands of hospitals that didn't comply. Biden also rolled back the rule, allowing the posting of unaccountable estimates in lieu of actual prices needed to shop. And health insurers have buried their data disclosures in massive files full of meaningless "ghost codes" that crash computers and are nearly impossible to parse.
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Trump's new order increases enforcement to boost compliance, requires actual prices — not estimates — so patients can shop with financial certainty, expands transparency requirements throughout the healthcare system, and standardizes data disclosures, so consumers can make meaningful price comparisons. It gives people prices before they receive care.
Trump's order will also enact overdue requirements for health insurers to provide Advanced Explanations of Benefits (AEOBs), required by the bipartisan No Surprises Act that passed at the end of 2020. AEOBs let patients know exactly what they'll owe — including their out-of-pocket patient responsibility — giving them financial peace of mind.
Under the status quo, healthcare is fundamentally un-American. It is the only economic sector where consumers cannot see real prices before they buy.
They also empower employers and unions to audit their health plans and verify claims payments match provider bills and posted prices. Employers and unions can then eliminate spread pricing that — as the New York Times reported last year — often requires their health plans to pay far more to middle players than providers.
Drawing on a JAMA study concluding that 25% of U.S. healthcare spending ($4.9 trillion in 2023) is waste, overcharges, and fraud, economists estimate systemwide price transparency can generate approximately $1 trillion of savings. Putting $1 trillion a year in overbilling back into the productive economy, including worker paychecks and business investment, will result in an enormous annual economic stimulus.
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Healthcare price transparency is the most important microeconomic reform in American history. It creates a functional, competitive marketplace that restores choice, accountability and trust. When prices are clear, markets work. When markets work, costs fall. And when costs fall, wages rise.
President Trump's executive order — and the ensuing federal rules issued later in May —will finally make healthcare price transparency a reality. They will solidify Trump's legacy as the president who fixed American healthcare.
Cynthia A. Fisher is a life sciences entrepreneur, and founder and chairman of PatientRightsAdvocate.org.
Arthur B. Laffer is founder and chairman of Laffer Associates and was an adviser to President Reagan.
