The Right Rx on Health Policy: A Strong House Performance

COMMENTARY Health Care Reform

The Right Rx on Health Policy: A Strong House Performance

Jul 24, 2023 5 min read

Commentary By

Robert E. Moffit, PhD

Senior Research Fellow, Center for Health and Welfare Policy

Mary McCloskey

Former Research Assistant, Domestic Policy

The Speaker’s targeted approach is starting to bear fruit. xp3rt5 / Getty Images

Key Takeaways

Overall, the bill expands private coverage options for workers and businesses—something that the ACA and other government-run health programs fail to do.

Their bill would also apply price transparency rules to health insurance plans, including plans in the individual market.

Congress is well on its way to making serious progress on health care reform. They deserve credit, and more importantly, they deserve our support.

After enacting a pro-patient, pro-consumer health care agenda that could expand personal choices and lower costs, House Speaker Kevin McCarthy (R-CA) and his leadership team deserve credit. From expanding access to affordable health coverage for small businesses to ensuring price transparency for medical services and requiring Medicare to pay the same for certain procedures, whether they are delivered in a hospital setting or a doctor’s office, the Speaker’s targeted approach is starting to bear fruit.

The recently enacted Choice Arrangement Act (H.R. 3799), sponsored by Rep. Kevin Hern (R-OK), is a prime example. Heading to the Senate after being passed by a vote of 220 to 209, Rep. Hern’s bill directly addresses the problems of small businesses and their workers who have no options if they cannot afford the current cost of group employment coverage.

Under the bill, small employers would be able to band together—whether they are in the same industry or not—to create an “association health plan” and a large insurance pool that would empower employers to negotiate lower premiums and out-of- pocket costs for their employees. It would also enable them to customize their benefit offerings, which would reduce employee premium costs.

Rep. Hern’s bill also allows employers to provide individual coverage health reimbursement arrangements (ICHRAs) for their workers. Under these arrangements, employers can make tax-free contributions to special accounts that workers can then use to buy individual health insurance with tax-free premiums. That means that workers and their families would be able to enroll in the kind of health plans that they want, but without companies imposing lifetime caps or denying people coverage for preventive medical services.

>>> Federal Price-Transparency Rules: How Congress Can Make Them More Effective

Overall, the bill expands private coverage options for workers and businesses—something that the ACA and other government-run health programs fail to do. Perhaps that’s why the National Federation of Independent Business (NFIB), representing small businesses, strongly supports the bill. It certainly helps explain why the Biden administration strongly opposes it.

Meanwhile, in a refreshing break from intense partisan polarization, Rep. Cathy McMorris Rogers (R-WA), chair of the House Energy and Commerce Committee, has been working closely with ranking minority leader Rep. Frank Pallone (D-NJ) to secure bipartisan support for a half dozen health-related bills that will soon be schedule for House floor, debate, and passage.

Perhaps the most significant for patients are the provisions of H.R. 3561, The Patient Act, which reinforces existing regulations related to promoting transparency. More specifically, the bill would require hospitals to publish a consumer-friendly list of the standard charges for a total of 300 shoppable services. The list must include the price for each item and service, including any current payer-specific negotiated charges, the maximum and minimum negotiated prices, and the discounted price. If hospitals fail to comply, they would be subjected to a fine, and the government would publish a list of those hospitals violating the law.

Their bill would also apply price transparency rules to health insurance plans, including plans in the individual market, as well as the small and large group markets. In other words, insurers would be required to provide the public with pricing information on benefits and services, including the in-network rates, the maximum allowed amount, and the amount of cost sharing for each item or service. Price transparency requirements would also apply to clinical laboratory tests, Medicare Advantage plans, Medicare prescription drug plans, and pharmacy benefit managers (PBMs).

This legislation is a good start. A robust price transparency policy could deliver significant health care savings. Writing in Inquiry, the Journal of Health Care Organization, Provision and Financing, Professor Stephen Parente of the University of Minnesota wider site neutrality in Medicare payment, which would, in turn, start to create a level playing field for serious market competition between giant hospital corporations and independent medical practices. And more competition, of course means lower costs.

All of this would save a lot of money in the healthcare sector. According to a recent study conducted on behalf of the Blue Cross Blue Shield Association, comprehensive Medicare site neutrality would yield a total savings of $471 billion over ten years, including a reduction of $117 billion in private health insurance premiums.

It could also achieve serious financial advantages for consumers on the ground. Writing in JAMA Network, a team of academicians recently examined comparative pricing for a set of shoppable medical procedures delivered by 1116 conventional hospitals and 156 physician-owned hospitals in the same geographic areas. They found that the physician-owned hospitals were able to deliver the same services at prices that were approximately one-third lower than conventional hospitals. A stunning performance.

>>> Time to Turbo-Charge Health Care Price Transparency

But there is one big problem: Medicare patients today cannot take full advantage of physician owned hospitals, despite their superior record in providing high quality and cost- effective care. With the Affordable Care Act (ACA), Congress and the Obama administration restricted Medicare and Medicaid reimbursement for these innovative facilities; an anti-competitive measure that undercuts seniors access to high quality and specialized hospital care.

It is past time to reverse this costly and outdated policy. And Congress should build on its recent momentum to turbo-charge its health care price transparency agenda.

One big idea the House should consider to accelerate the impact of price transparency is a “shared savings” program. Simply put, if an insured patient with several options for a medical service chooses a low-cost option, the insurance company would share the savings from that choice, say 50/50, with the patient.

In short, the insurance company would give the patient a tax-free rebate, which he could, if he wished, deposit in a health savings account. Such a program would harness the economic incentives of both patients and health insurers in securing cost- effective care, while intensifying competition among medical professionals in delivering high quality care at competitive prices.

If their record so far is any indication, the 118th Congress is well on its way to making serious progress on health care reform. They deserve credit, and more importantly, they deserve our support. After all, there is still much more to be done.

This piece originally appeared in RealClear Policy

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