Discussion · Senate
Rand Paul Republican
“I object to this bill. Forcing hospitals to show their prices will not make healthcare cheaper. Most people use insurance or the government to pay their medical bills, and those prices are already fixed ahead of time. Patients cannot shop around to change them. Instead of adding new government rules, Congress should let people band together into large buying groups to negotiate better health insurance rates.”
“Reserving the right to object, this legislation is well- intended but also misguided. It doesn’t address the root problem and, in all likelihood, will not lower any healthcare prices. Congress has spent almost a decade pondering price transparency, regulations, and implementing them to some extent. Even with all this effort, current price transparency tools are only used by less than 20 percent of patients. Patients in general ignore prices. Why? Because they are disconnected from the price. They don’t pay. Someone else pays the bill. Prices are opaque because the patient is separated from the direct payment by a third party. For almost all patients, prices are fixed by a third party--either insurance or government, Medicare, Medicaid. Mandated transparency, when an insurance company is in the middle, has actually no effect on prices. Imagine it this way: About half of the country has Medicare, the other 10 or 20 percent has Medicaid, and then there is private insurance. There are about 5 percent of Americans who have no insurance. Now, transparency might make a difference there, but it actually already does. If you have to pay cash, everybody knows the price. Nobody will go in anywhere. If you are paying for something out of pocket, the prices are completely transparent and everywhere. An example is LASIK surgery. LASIK surgery is done to correct vision so you don’t have to wear glasses. The prices are on billboards all around town. If you call the receptionist or anybody where you have to pay cash for an elective procedure, the receptionist will tell you on the phone what the price is. The one they won’t tell you the price on is the gallbladder, if you have your gallbladder removed, because that has been negotiated with a third party, the insurance company. There is a price, and you are not going to, if you know the price, go get a better price. If they tell you at the hospital that the price is $500 but your insurance pays for the gallbladder, that is what it pays at the other hospital. If it pays $600 and you know the price and you go one versus the other--you don’t get to negotiate the price. The price is already fixed. The government sets the prices, too, so if you know what the price is that Medicare is going to pay, it doesn’t do anything. Nobody can change the price; it is actually mandated by law. So the problem really is that prices are fixed almost all the time. It is not lack of transparency; it is that prices are fixed. Now, there is a part of the market that actually does work. It is called elective, which means not covered by insurance. It also works to a certain extent if you are willing to pay at that time. I go to a local HCA hospital on occasion, and when I pay, they say: If you will pay now, we will give you a 25-percent discount by immediate pay. So there are parts of the system that do work. But the opaqueness is because you are not paying. The opaqueness is because a third party is paying, and that really is where the system is broken. So there is almost nobody choosing any healthcare based on price other than the 5 percent or those who are in the elective market, the 5 percent who don’t have insurance or in the elective market. Even if you have a high deductible but you still have insurance, all your prices under the deductible have already been negotiated. You may not know what it is going to cost, that it is going to be $500 for the gallbladder or whatever the surgery is going to cost you--you don’t know those prices, but they have already been negotiated. If we tell you, if we mandate that they tell you and then they tell you, you aren’t going to be able to go to another hospital and get a cheaper price because it has already been negotiated. The insurance company has already negotiated this with the hospitals. So this is well-intended, but it is just not going to work, and it just adds one more government mandate and is not a good idea. I would argue that the mandated transparency regulations will actually have limited effect even in the best-case scenario because over 95 percent of the healthcare market involves insurance or government middlemen already. Healthcare prices have continued to rise 5 to 10 percent annually because of the root cause of the problem: insurance and third-party payments. We also don’t seem to have enough leverage as patients to get a better price. There is something that we could do, and it is a bill that I have had out there for years and that I would be happy to get behind a unanimous consent effort, and this is something called association healthcare or health association. The way they would work is this: Instead of an accountant and three employees trying to get insurance for four people, you join a buying group--this would be like Amazon, Sam’s Club, Costco--and then a large group would negotiate, not for individual policies but for a group policy. It takes a change in our labor laws. We change the ERISA law to let you do this. Then you would be able to dial up Amazon, get on Amazon, and if Amazon had 40 million members that wanted to buy insurance, 1 person at Amazon would call up probably the CEO of UnitedHealthcare and negotiate a rate. So what we would do is grant you leverage. It doesn’t cost anything, doesn’t mandate anything, and lets you do what you want. It gets rid of aspects of our labor law that prevent this. It would let anybody join a buying group or co-op to buy their insurance. Now, understandably, the insurance companies are opposed to this. We haven’t been able to get it out of committee. And one of the reasons is the Democrats largely oppose this because they say: Well, we are kind of for it, but we have to mandate what the insurance is. This has been the thing going all the way back to ObamaCare. When you mandate what is in insurance, you elevate the cost of it. So if we let the market take care of it, let people come together in co-ops to buy insurance, you could drive prices down. This window dressing won’t work because the prices are already fixed, and knowing what the prices are won’t bring the prices down. Employers already do some of this negotiation for you. There are examples. Lowe’s Home Improvement has negotiated a $325 MRI at facilities in the highest tier. There are websites that will help you out if you don’t have insurance. The only people who really benefit by some of these price transparencies would be people without insurance, but there are some. For example, there is a website you can go to where you can get an MRI on Sundays. If you live in a big city and you will drive an hour outside the big city and you want to get your MRI and you will spend an hour driving and do it on Sunday afternoon at 3 o’clock when the volume is really low, you can get a discount. There are websites that will direct you there. But until Congress is serious about reducing the Federal Government’s role in healthcare, reducing the subsidization, allowing people to join co-ops--that is when we will actually get the price down. But this bill actually won’t do it. I think it adds mandates, and it ultimately actually might increase the price of healthcare as we add one more cost to the insurance companies and those who have to provide healthcare. So, therefore, I object.”
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Reserving the right to object, this legislation is well- intended but also misguided. It doesn’t address the root problem and, in all likelihood, will not lower any healthcare prices. Congress has spent almost a decade pondering price transparency, regulations, and implementing them to some extent. Even with all this effort, current price transparency tools are only used by less than 20 percent of patients. Patients in general ignore prices. Why? Because they are disconnected from the price. They don’t pay. Someone else pays the bill. Prices are opaque because the patient is separated from the direct payment by a third party. For almost all patients, prices are fixed by a third party--either insurance or government, Medicare, Medicaid. Mandated transparency, when an insurance company is in the middle, has actually no effect on prices. Imagine it this way: About half of the country has Medicare, the other 10 or 20 percent has Medicaid, and then there is private insurance. There are about 5 percent of Americans who have no insurance. Now, transparency might make a difference there, but it actually already does. If you have to pay cash, everybody knows the price. Nobody will go in anywhere. If you are paying for something out of pocket, the prices are completely transparent and everywhere. An example is LASIK surgery. LASIK surgery is done to correct vision so you don’t have to wear glasses. The prices are on billboards all around town. If you call the receptionist or anybody where you have to pay cash for an elective procedure, the receptionist will tell you on the phone what the price is. The one they won’t tell you the price on is the gallbladder, if you have your gallbladder removed, because that has been negotiated with a third party, the insurance company. There is a price, and you are not going to, if you know the price, go get a better price. If they tell you at the hospital that the price is $500 but your insurance pays for the gallbladder, that is what it pays at the other hospital. If it pays $600 and you know the price and you go one versus the other--you don’t get to negotiate the price. The price is already fixed. The government sets the prices, too, so if you know what the price is that Medicare is going to pay, it doesn’t do anything. Nobody can change the price; it is actually mandated by law. So the problem really is that prices are fixed almost all the time. It is not lack of transparency; it is that prices are fixed. Now, there is a part of the market that actually does work. It is called elective, which means not covered by insurance. It also works to a certain extent if you are willing to pay at that time. I go to a local HCA hospital on occasion, and when I pay, they say: If you will pay now, we will give you a 25-percent discount by immediate pay. So there are parts of the system that do work. But the opaqueness is because you are not paying. The opaqueness is because a third party is paying, and that really is where the system is broken. So there is almost nobody choosing any healthcare based on price other than the 5 percent or those who are in the elective market, the 5 percent who don’t have insurance or in the elective market. Even if you have a high deductible but you still have insurance, all your prices under the deductible have already been negotiated. You may not know what it is going to cost, that it is going to be $500 for the gallbladder or whatever the surgery is going to cost you--you don’t know those prices, but they have already been negotiated. If we tell you, if we mandate that they tell you and then they tell you, you aren’t going to be able to go to another hospital and get a cheaper price because it has already been negotiated. The insurance company has already negotiated this with the hospitals. So this is well-intended, but it is just not going to work, and it just adds one more government mandate and is not a good idea. I would argue that the mandated transparency regulations will actually have limited effect even in the best-case scenario because over 95 percent of the healthcare market involves insurance or government middlemen already. Healthcare prices have continued to rise 5 to 10 percent annually because of the root cause of the problem: insurance and third-party payments. We also don’t seem to have enough leverage as patients to get a better price. There is something that we could do, and it is a bill that I have had out there for years and that I would be happy to get behind a unanimous consent effort, and this is something called association healthcare or health association. The way they would work is this: Instead of an accountant and three employees trying to get insurance for four people, you join a buying group--this would be like Amazon, Sam’s Club, Costco--and then a large group would negotiate, not for individual policies but for a group policy. It takes a change in our labor laws. We change the ERISA law to let you do this. Then you would be able to dial up Amazon, get on Amazon, and if Amazon had 40 million members that wanted to buy insurance, 1 person at Amazon would call up probably the CEO of UnitedHealthcare and negotiate a rate. So what we would do is grant you leverage. It doesn’t cost anything, doesn’t mandate anything, and lets you do what you want. It gets rid of aspects of our labor law that prevent this. It would let anybody join a buying group or co-op to buy their insurance. Now, understandably, the insurance companies are opposed to this. We haven’t been able to get it out of committee. And one of the reasons is the Democrats largely oppose this because they say: Well, we are kind of for it, but we have to mandate what the insurance is. This has been the thing going all the way back to ObamaCare. When you mandate what is in insurance, you elevate the cost of it. So if we let the market take care of it, let people come together in co-ops to buy insurance, you could drive prices down. This window dressing won’t work because the prices are already fixed, and knowing what the prices are won’t bring the prices down. Employers already do some of this negotiation for you. There are examples. Lowe’s Home Improvement has negotiated a $325 MRI at facilities in the highest tier. There are websites that will help you out if you don’t have insurance. The only people who really benefit by some of these price transparencies would be people without insurance, but there are some. For example, there is a website you can go to where you can get an MRI on Sundays. If you live in a big city and you will drive an hour outside the big city and you want to get your MRI and you will spend an hour driving and do it on Sunday afternoon at 3 o’clock when the volume is really low, you can get a discount. There are websites that will direct you there. But until Congress is serious about reducing the Federal Government’s role in healthcare, reducing the subsidization, allowing people to join co-ops--that is when we will actually get the price down. But this bill actually won’t do it. I think it adds mandates, and it ultimately actually might increase the price of healthcare as we add one more cost to the insurance companies and those who have to provide healthcare. So, therefore, I object.