EDITORIAL: A lack of price transparency is one reason health care costs so much

Imagine how absurd it would be to patronize a grocery store that didn’t post any prices. Yet that’s what millions of Americans do when they use health care.

For years, the ever-increasing price of health care has been a major cause of concern. Among the costliest types of medical care are visits to the emergency room. An unexpected five-figure bill can send a family spiraling toward bankruptcy. The continued rise of medical inflation is one reason Medicaid and Medicare are such a drain on the nation’s fiscal health.

There are many reasons for these increased costs. One is that medical technology and pharmaceuticals have never been better. Equipment and innovation cost money. Improvements to care, however, can be worth the added expense.

But many experts point out that some of the higher costs stem from a lack of transparency. Patients don’t know what procedures cost. Even if they did, hospital prices are opening bids in an auction. Behind closed doors, insurance companies negotiate steep discounts for those who carry their policies.

Think about the grocery store analogy. Imagine that you take bananas, eggs and milk from the store but don’t pay anything — yet. Four weeks later, you get a bill for $100. But don’t worry: Your food insurance company has successfully reduced the price from the original charge of $400. Who wouldn’t consider that an absurd system?

Then there’s the matter of who bears the brunt of the higher costs. Yes, insurance premiums are increased because of cost-shifting, but low-income workers without insurance also get hit when they are billed for the sky-high prices that most people don’t pay. This is as absurd as if the government made public transportation more expensive than owning a luxury sports car.

These are some of the reasons why President Donald Trump has taken steps to address this issue. In November, he signed an executive order forcing hospitals to disclose online the final prices they accept from insurance companies, starting in 2021. Hospitals sued, and the court fight is ongoing.

“For decades, hospitals, insurance companies, lobbyists and special interests have hidden prices from consumers so they could drive up costs for you, and you had no idea what was happening,” Mr. Trump said when he announced the rule.

Many medical providers argue that pricing is complicated and depends on a variety of factors unique to each individual’s treatment. Perhaps. But that doesn’t explain why the cost of many basic procedures varies widely from hospital to hospital.

Mr. Trump is right. Price transparency allows individuals to shop for the best nonemergency deal. It would also force hospitals to compete, thus saving consumers money. No wonder the medical establishment is so opposed to Mr. Trump’s efforts.