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White House runs into health-care industry hostility as it plans executive order

Evan Vucci/AP

President  Trump is preparing to issue an executive order directing federal agencies to promote transparency in health-care costs, a move that would position him as an ally of consumers.
Evan Vucci/AP President Trump is preparing to issue an executive order directing federal agencies to promote transparency in health-care costs, a move that would position him as an ally of consumers.

President Trump is preparing to issue an executive order to foster greater price transparency across a broad swath of the health-care industry as consumer concerns about medical costs emerge as a major issue in the lead-up to next year’s presidential election.

The most far-reaching element favored by the White House aides developing the order would require insurers and hospitals to disclose for the first time the discounted rates they negotiate for services, according to health-care lobbyists and policy experts familiar with the deliberations.

The idea has stirred such intense industry opposition, however, that it may be dropped from the final version, the sources said.

Compelling disclosure of negotiated rates “would have the ultimate anti-competitive effect,” said Tom Nickels, the American Hospital Association’s executive vice president for government relations and public policy. “I know they are aware of the concerns.”

Other parts of the order are expected to make it easier for people on Medicare, the federal insurance program for older and disabled Americans, to find out what they would pay for treatment at various hospitals by widening the range of services for which hospitals must post their prices.

The order also may include an effort to promote more competition among hospitals by slowing a trend toward consolidation, according to an administration official who spoke on the condition of anonymity about details that continue to take shape.

“We’re still ironing it out,” the official said.

The executive order, likely to be announced by mid-June and first reported by the Wall Street Journal, would carry the force of law but not bring about immediate change. Such orders essentially direct federal agencies to rewrite rules to advance their goals — in this instance, the departments of Health and Human Services, Labor, and Justice, according to people familiar with the White House’s plans.

The order’s moving parts reflect a conservative conception of how to tame rising health-care costs, relying on competition — the idea that consumers will make prudent, price-minded choices if they are given enough information and options about where to get their care. Critics say that patients are seldom in a position to comparison-shop, following their doctors’ recommendations or confronting medical emergencies.

With surveys showing that voters trust Democrats significantly more than Republicans to solve problems in the health-care system, the order is, in part, a strategy by the White House to portray Trump as an ally of consumers for his reelection campaign.

“My understanding is they are trying to figure out what is going to have high splash value,” said Dan Mendelson, founder of Avalere Health, a Washington-based consulting firm.

The executive order would be Trump’s third relating to health care. Hours after his inauguration, he signed an order giving agencies broad powers to undo regulations the Obama administration had created under the Affordable Care Act. In October 2017, Trump signed another order intended to bypass rules under that law, by making it easier for individuals and small businesses to buy alternative insurance with lower prices, less coverage and fewer consumer protections.

Unlike the first two, the upcoming order would be the first on a theme embraced by both political parties.

Republicans and Democrats alike have introduced nearly two dozen bills related to transparency so far this year, and two major bills are in draft form. Most are focused on curbing the price of prescription drugs, and others are designed to protect patients from what have been termed “surprise” hospital bills involving treatment by physicians outside their insurance networks.

The administration official said the executive order would focus on urging hospitals to increase price transparency for consumers, but the official did not specify how far the policy will go.

The work is being directed by Joe Grogan, director of the White House’s Domestic Policy Council, although senior HHS officials are heavily involved, according to several people who have had conversations with those engaged in the process.

The hospital industry has been consulted by the White House, according to one industry lobbyist. But an insurance industry official said the White House has not reached out to health insurers and has “declined to discuss its thinking on an executive order when asked by industry representatives.”

Both hospitals and insurers are vehemently opposed to being told they need to disclose the rates that they negotiate with one another.

“There is good transparency and bad transparency,” said Kristine Grow, spokeswoman for America’s Health Insurance Plans, a main industry trade group. “Good transparency provides consumers with information they can use to make their own smart decision, and causes health-care prices to go down for everyone

“This is bad transparency, because it is highly likely to cause prices to go up for everyone,” Grow said. If all the parties need to expose what rates they were willing to accept, she said, “it creates a floor for negotiations, not a ceiling.”

Nickels of the American Hospital Association said, “In order for entities in any sector of the economy — health care included — to be able to create a situation where there is give and take, there has to be some privacy.”

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