The ability of patients to see the prices of medical care upfront so they can shop around will reduce costs. That’s the theory behind President Trump’s “Radical Price Transparency” plan, which is also expected to lower costs through competition.
“When healthcare prices are hidden, large corporate entities such as hospitals and insurance companies benefit at the expense of American patients,” Trump said in an Executive Order directing various federal departments to enforce the measure. “Price transparency will lower healthcare costs and help patients and employers get the best deal on healthcare.”
The departments will ensure hospitals and insurers disclose actual prices, not estimates, and take action to make costs comparable across hospitals and insurers, including prescription drug prices, the President noted in his order. He also directed them to update enforcement policies to ensure hospitals and insurers comply with the new requirements.
Under the order, hospitals must maintain a consumer-friendly display of pricing information for up to 300 shoppable services and a machine-readable file with negotiated rates for every service the hospital provides. In addition, health plans must post their negotiated rates with providers, their out-of-network payments, and the actual prices they or their pharmacy benefit manager pay for prescription drugs. Finally, health plans must maintain a consumer-facing internet tool through which individuals can access price information.
According to the White House, healthcare costs vary widely from hospital to hospital in the same region. A patient in Wisconsin, for example, saved $1,095 by shopping for two tests between two hospitals located within 30 minutes of one another.
An economic analysis found that when fully implemented, the new rules could deliver savings of $80 billion for consumers, employers, and insurers. It predicts that employers could lower their healthcare costs by an average of 27% on 500 common services by better shopping for care.
Trump noted that the Biden administration was sued in 2023 for not enforcing prescription drug transparency requirements and promised to hold health plans accountable for making drug prices transparent. During his first term, Trump mandated that hospitals and insurers make prices public, but Biden failed to prioritize further implementation and enforcement of the requirements. Recent data shows the top 25 percent of the most expensive healthcare service prices have dropped by 6.3 percent per year following the initial implementation of price transparency under Trump’s previous administration.
“American patients are fed up with the status quo—95% deem healthcare price transparency an important priority, with six in ten saying it should be a top priority of the government,” according to the President.
“Our goal was to give patients the knowledge they need about the real price of healthcare services. They’ll be able to check them, compare them, go to different locations, so they can shop for the highest-quality care at the lowest cost. And this is about high-quality care. You’re also looking at that. You’re looking at comparisons between talents, which is very important. And then, you’re also looking at cost. And, in some cases, you get the best doctor for the lowest cost. That’s a good thing.”