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Bush Hints at Legislation on Price Transparency

FEBRUARY 15, 2006 -- Legislation may be needed to ensure that hospitals, physicians, and other health care providers give consumers more detailed information about the cost of health care services, President Bush said Wednesday during an appearance in Dublin, Ohio.

"I know members of Congress are working on a bill. It would be better this be done with people saying, 'oh, we understand it's important to be transparent,'" Bush said. "There's always a bill out there in case the volunteerism is not quite as strong as it should be."

Bush added that on Thursday, "I'm going to have a little visit with people in the insurance industry and the health care industry and the business industry to encourage transparency." On Tuesday, hospital industry and administration officials met to discuss price transparency issues.

Helping consumers understand how much health care costs—and getting them to make purchasing decisions based on that knowledge—is a critical part of the administration's plan to expand health savings accounts (HSAs), which were created in the 2003 Medicare drug law (PL 108-173).

The accounts, which Bush discussed at length in his remarks Wednesday, allow people who sign up for high-deductible health plans to contribute and withdraw funds to cover health care costs tax-free. The idea is that once patients are forced to pay more costs out-of-pocket, they will begin to comparison shop and request quality data, eventually driving down the costs of health care.

Some health care providers say the information consumers need is how much their out-of-pocket costs will be for a particular service and not how much, for example, a hospital charges for a particular service. The quality of care provided is also an important fact consumers should consider before making a choice, providers say.

"How do you make it meaningful for consumers? Is it really worthwhile to show the consumer a master list of thousands of prices?" said Carmella Coyle, senior vice president at the American Hospital Association.

Allan Hubbard, director of the president's National Economic Council, met with hospital executives Tuesday at the White House to discuss price transparency issues. According to a memo written by one of the meeting's participants, Hubbard told the executives that Bush would ask Department of Health and Human Services Secretary Michael O. Leavitt to develop a voluntary program for hospitals to report their prices.

"He did not give any details on this program or what form this transparency would take," Federation of American Hospitals President Chip Kahn wrote in a memo to his group's board of directors and staff, a copy of which was obtained by CQ HealthBeat. "It was obvious that [Hubbard] is approaching the issue from 30,000 feet and had not gotten into the details," Kahn wrote.

In his memo, Kahn said he stressed during the meeting that "it is the insurers who can best inform patients about their alternatives regarding the potential out of pocket expenses of using one hospital versus another, and that hospital charges were only relevant to a very narrow band of patients."

While the administration wanted a voluntary solution, Hubbard "contended that if hospitals do not take it upon themselves to solve this problem, the Congress might choose to," Kahn wrote.

In his remarks Wednesday—delivered at Wendy's International Inc., whose 9,000 full-time employees and families are covered by HSAs—Bush said the accounts would allow consumers to "shop around until you get the best treatment at the best price . . . When you inject this type of thinking in the system, price starts to matter," he said. "You begin to say, well, maybe there's a better way to do this, and a more cost-effective way."

Critics contend that HSAs would cause a net increase in the number of uninsured Americans. In an analysis released by the Center on Budget and Policy Priorities on Wednesday, Massachusetts Institute of Technology professor Jonathan Gruber projects that while 3.8 million previously uninsured people would gain health coverage through HSAs as a result of the president's fiscal 2007 budget proposals, 4.4 million people would become uninsured because their employers would drop coverage and the workers would not be able to secure coverage on their own. The net effect, Gruber concludes, would be to increase the number of uninsured Americans by 600,000.

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