Laws and rules requiring public access to healthcare prices have bipartisan support in Congress but are viewed as an ineffective nuisance by many in the industry. They contend consumers will never be able to use pricing information no matter how accurate it becomes, and insurers already have the responsibility to secure favorable in-network rates through negotiations. And besides, these critics further argue, patients are really only worried about cost-sharing, which is much easier for them to ascertain than are the all-in prices for complex cases. Forcing hospitals and insures to upload massive datasets onto public websites is therefore said to be a meaningless gesture.
It is hard to square this perspective with the growing number of reports which use the disparaged pricing datasets to document how poorly insurers and ESI plans are at protecting workers and patients from needlessly high prices. The critics also fail to mention that it is high overall pricing which is driving up premiums and suppressing wages.
Trilliant Health, a healthcare analytics company, released one such study last year examining pricing information from 2024 and 2025. Its findings are instructive.
The company looked at the uploaded datasets from two national companies (Aetna and United Health Group). The focus was on their disclosed in-network rates for eleven high-volume services provided in every major market in the country. Among the services included in the study were common heart surgeries, colonoscopies, knee and hip replacements, and hernia repair operations.
After scrubbing the data and eliminating much useless information, the study’s authors were able to isolate the applicable in-network rates for roughly 2,700 hospitals and 3,500 ambulatory surgical centers providing services to 50 million covered lives.
The main takeaway is that patients enrolled in employer plans are charged highly varied prices for the same services without any clear rationale for the observed differences.
- For the six services covered by the study that are provided during inpatient hospital stays, the average ratio of the highest to the lowest negotiated rates was just over 9 to 1.
- The median rate for coronary bypass surgery without complications was $68,194 but the highest negotiated rate was close to $248,000.
- The median rate for the services provided outside of inpatient hospital stays were always lower in ambulatory surgical centers (ASCs) than in hospital-owned clinics.
- For colonoscopies, the median rate was $1,179 for ASCs and $3,633 for hospital outpatient departments. The authors estimate employers could save $4.5 billion annually just by steering patients needing this periodic preventative service away from hospital outpatient departments.
- There are wide disparities in pricing across states and within states for the same services. The median price paid by Aetna for a colonoscopy in Missouri was $4,354, which was $3,811 above the median rate it paid in Montana and Wyoming.
In a competitive market, prices tend to converge near the marginal cost of providing an additional service. It is implausible that the variation documented in the Trilliant study can be explained away by the peculiarities of healthcare.
A recent settlement in an antitrust case offers a more compelling explanation. Earlier this year, the Department of Justice sued OhioHealth, a major not-for-profit hospital system headquartered in Columbus, for engaging systematically in anti-competitive practices through its contracting strategy. The disputed terms prevented insurers, and therefore also the employers sponsoring the coverage, from securing lower-priced care for plan enrollees outside of the hospital system’s network. It is telling that OhioHealth agreed to settle the case by accepting all of the remedies demanded by the government.
While stronger antitrust enforcement is clearly needed, that alone is unlikely to eliminate the problem entirely. Employers need to be motivated too. Many remain passive out of fear of displeasing their workers. As mentioned in a recent essay, ESI suffers from a collective action problem. Individual employers cannot fix the market on their own but see cooperative efforts with other firms as challenging too. To get around this obstacle, Congress should reconsider its repeal of the Cadillac tax (or, better yet, develop a better version of the same idea). Without a cap on tax-preferred premiums forcing their hand, employers are likely to continue to follow the path of least resistance, which is to muddle along with higher premiums.
What should be decisively rejected is any suggestion of pulling back on price transparency. Far from being useless, the government’s rules are exposing the pervasiveness of excessive pricing in commercial insurance. Congress and the Centers for Medicare and Medicaid Services (CMS) should step up the pressure with new requirements for standardized formats and definitions. Several regulatory steps move in this direction, as would bipartisan legislation under review in Congress.
It cannot be emphasized enough that it is not just cost-sharing that matters to patients. High prices drive up premiums for employers which is leading directly to slower wage growth for workers.