Price transparency is necessary to bring down consumer and employer costs

By Chris Deacon

This is a lightly edited excerpt of testimony recently provided to the U.S. Senate’s Health, Education, Labor, and Pensions hearing " Making Health Care Affordable: Solutions to Lower Costs and Empower Patients."

Price opacity in healthcare is not a bug in the system — it is the system. The current structure relies on withholding critical pricing information from employers, patients and even policymakers. This lack of transparency enables dominant market participants to dictate prices, control access and avoid accountability. The justification often cited — that transparency would be anticompetitive or compromise proprietary information — simply doesn’t hold up. No other major consumer-facing industry is permitted to operate with such sustained, systemic price secrecy, especially when individual patients and public institutions are footing the bill.

In healthcare, the absence of pricing transparency is not incidental. It has been a deliberate strategy that allows intermediaries to negotiate rates in private, steer utilization in ways that maximize revenue, and shield the true cost and value of services from those paying for them.

Let’s be clear about who those funders are. Government is the largest payer of healthcare in this country. Federal and state governments together account for roughly 50% of all U.S. healthcare spending. In 2023, total U.S. healthcare spending reached $4.7 trillion, with Medicare and Medicaid accounting for more than $1.8 trillion of that amount. Employer-sponsored insurance is subsidized through the federal tax code at a cost of more than $300 billion annually in forgone tax revenue. And, the Affordable Care Act's marketplace subsidies cost approximately $90 billion per year and are projected to rise. Public employers — school districts, state and local governments — contribute hundreds of billions annually for employee health coverage. This is not a private negotiation between two businesses. This is a publicly subsidized, consumer-funded system that hides prices from the very people who pay.

Hospital price transparency rules, finalized by the Centers for Medicare & Medicaid Services (CMS) and effective Jan. 1, 2021, were intended to address one of the most fundamental breakdowns in healthcare markets: the inability of purchasers to know, compare or evaluate prices. The regulation requires hospitals to publicly post both their gross charges and payer-specific negotiated rates for all services, enabling patients and purchasers to better understand what they are being charged and what others are paying.

But more than three years into implementation, compliance remains poor. A 2024 study by PatientRightsAdvocate.org found that just 36% of hospitals were fully compliant with the federal rule. Many hospitals continue to post incomplete files, suppress negotiated rates or fail to make the data available in a machine-readable format. Others use complex billing codes or unsearchable PDFs, undermining the rule’s intent of enabling apples-to-apples price comparisons. This lack of compliance is not due to ambiguity. CMS has issued detailed technical guidance and offered multiple rounds of clarification. Yet enforcement has been limited. As of mid-2025, fewer than 30 hospitals have been fined, despite thousands of violations documented by independent audits. The penalties — often less than the revenue hospitals earn from a single high-margin commercial admission — are not meaningful deterrents.

The practical result is that employers, unions and state purchasers cannot reliably compare prices across providers or evaluate whether their networks are delivering competitive value. When a hospital in one ZIP code charges $6,000 for a colonoscopy and a hospital 10 miles away charges $1,200 — but neither posts usable data — there is no way for purchasers to intervene, steer volume or hold plans accountable for network adequacy and cost-efficiency. The Hospital Price Transparency rule was not a radical policy. It simply required hospitals — entities that receive billions in taxpayer funding through Medicare, Medicaid, 340B and tax exemptions — to disclose the prices they have already negotiated with insurers. Price transparency is not just about consumer choice. It is the baseline requirement for any form of accountability. Without it, employers cannot verify prices paid, regulators cannot assess market fairness and patients remain blindfolded in one of the most expensive transactions of their lives.

To restore the utility of this rule, enforcement must match the policy’s intent. CMS should levy meaningful fines for noncompliance, publish an accessible database of violators and hospitals that fail to comply should face conditions on their participation in other federal funding programs — including Medicare, Medicaid and 340B.

If healthcare is to be a market, it must start by meeting the most basic condition of a functioning market: visible pricing.

Read the full testimony here.

Listen to an excerpt from the testimony here.

Chris Deacon is the principal and founder of VerSan Consulting.

*The opinions expressed in this column are those of the author and do not necessarily reflect the views of HealthPlatform.News.