You deserve to know what you pay for hospital care

Persistently high inflation continues to make life more expensive for every Pennsylvanian. Though fiscal mismanagement on the federal level is one of the causes, state legislators have a responsibility to help constituents with this cost of living crisis where we can. One major cost driver Harrisburg can address is the outrageous price of health care.

According to my analysis of federal data, Pennsylvania’s per capita health-care costs have more than doubled over the last 20 years. If the price of a gallon of milk increased at the same rate as health-care costs since the end of World War II, it would cost more than $50.

The costs of hospital stays are by far the largest portion of the medical expenditures Pennsylvanians pay. Hospital price transparency requirements can reverse these runaway costs by empowering residents of the commonwealth to choose affordable care and introducing much-needed competition to the health-care market.

It seems like almost everyone has a health-care billing horror story. As a state lawmaker, I first became interested in this topic after a constituent of mine, a single mother on a fixed income, told me how a local hospital sent her a bill that was five times higher than initially estimated. Her bill has been put in collections, threatening her credit score and assets.

I’ve since heard many stories of insured patients being blindsided by four- or five-figure hospital bills for routine care. In one egregious case, Lehigh Valley Hospital in Allentown charged an insured cyclist $151,804 to treat his injuries from a crash.

As a result of these inflated prices, half of Pennsylvanians struggle to afford health care, and around one-quarter of them delay or avoid needed treatments for fear of financial ruin.

Health care is the only service in the economy where prices aren’t known up-front. Hospitals take advantage of this opaque dynamic to bill far more than fair market rates — and far more than they could if consumers knew prices before care.

Johns Hopkins University researchers estimate that hospitals bill an average of seven times their cost of care. They conclude UPMC Presbyterian in Pittsburgh has a markup of 11.9 times, Temple University Hospital in Philadelphia 9.3 times, and Lehigh Valley Hospital 7.6 times.

Robust price transparency can give patients the information they need to avoid price-gouging hospitals in favor of cheaper alternatives. When we know actual prices, we can budget for care, identify wide price discrepancies for the same treatment, and fight back against overcharging. The vast majority of health-care procedures are scheduled, but health-care competition can reduce prices for all hospital services, including emergencies.

Pennsylvania employers, who provide health insurance to most residents with private coverage, can use hospital price disclosures to steer their employees to higher-value care. They could then share the ensuing savings with their employees through lower premiums and higher wages, boosting the state’s economy.

Some innovative state employers are already reducing health plan costs by shopping for care. For instance, Stauffer’s grocery in Lititz, Pa., cut its health-care costs by about 40% by directly partnering with providers at up-front rates. It shared these savings with employees in the form of no copays or deductibles and cash bonuses. Broad price transparency can make it easier for other employers to follow suit.

A federal price transparency rule that took effect in January 2021 already requires hospitals to provide clear, accessible pricing information online about the items and services they provide. Yet compliance has been spotty. According to a recent study by PatientRightsAdvocate.org, 25% of hospitals nationwide are fully complying with the rule.

State legislation can fill the gap. Codifying the rule at the state level can add another enforcement mechanism to compel Pennsylvania hospitals to comply. State legislation can also go beyond the federal rule to ensure patients can access standardized, all-in prices. Pennsylvania’s Health Care Cost Containment Council, an independent state agency tasked with addressing escalating costs, should make health-care price transparency its top priority.

Hospital price transparency is pro-patient and pro-provider. We are all thankful for the incredible work doctors and nurses do daily to keep our population healthy. Yet hospital costs have spiraled out of control, and meaningful price transparency is the best way to reverse them and preserve affordable access to high-quality care. Making health care affordable will also help Pennsylvania households contend with the higher prices of everything else.

David Rowe represents the 85th District in the Pennsylvania House of Representatives.