Imagine you’re planning a cross-country road trip. You know you’ll hit toll roads along the way, but here’s the catch: every toll booth gives you a different answer about how much you’ll pay in total. Some give you an average, others offer a wide range of options, and some just shrug. You’re told to get the final total price from the road construction crew because they built the road. However, they have no idea the route you will be taking, how much gas your car will burn, or which roads your car qualifies to drive on. It’s frustrating, inefficient, and ultimately the wrong source for a straight answer.
This is exactly what happens when new regulations require hospitals to give patients an exact price for their healthcare before treatment. It’s a well-meaning regulation, but it targets the wrong party. Hospitals are not the ones who determine final out-of-pocket costs for most patients, health insurers are. Forcing hospitals to provide exact pricing for insured patients is like asking the road builders how much your trip will cost when they don’t even know what route your navigation system will take. The system is asking the wrong expert.
Let’s break down why this matters, and why patients deserve accurate cost information from the only source who can truly provide it: their insurance company.
What the Regulation Gets Right (and What It Gets Wrong)
On February 25, 2025, the current administration issued an Executive Order which says, in part:
“The Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services shall take all necessary and appropriate action to rapidly implement and enforce the healthcare price transparency regulations issued pursuant to Executive Order 13877, including, within 90 days of the date of this order, action to: require the disclosure of the actual prices of items and services, not estimates…” Whitehouse.gov
The intent behind this Executive Order is applaudable, people want to know how much their medical care will cost before they receive it. No one likes surprise bills, and financial transparency is essential for trust in our healthcare organizations.
But here’s the problem: the exact price a patient pays depends almost entirely on their insurance company, not the hospital. There are many factors that go into how much an insurance company asks patients to pay for their healthcare. That list includes:
- Deductibles
- Copayments
- Coinsurance rates
- Out-of-pocket maximums
- Network status of the provider
- Whether pre-authorization or referrals are required, and more.
Hospitals can estimate the gross cost of a procedure, but they have limited visibility into a patient’s current insurance status or how much of their deductible they’ve already met.
So, when the government requires hospitals to provide an exact cost for a surgery, MRI, or lab test, they’re being asked to do the impossible. For insured patients, only the health insurance company knows what the patient will finally owe at the end of the day.
When Hospital Estimates Work, and When They Don’t
To be clear, there are situations where hospitals can and should provide exact prices upfront: when the patient is self-pay.
In those cases, the hospital is both the service provider and the billing party. There’s no third party in the middle, so the hospital can offer a fixed rate or cash-pay discount and stick to it. In these situations, price transparency works exactly as intended.
However, once a health insurance policy is involved, the picture gets more complex. Different insurers negotiate different reimbursement rates for the same procedure. What Blue Cross pays is not what Aetna pays, which isn’t what Medicare pays. And patients with the same insurance company can owe vastly different amounts based on their individual plans.
For example:
- Patient A has a $2,500 deductible, and they’ve already met $2,000 of it. Their knee surgery will cost them $500.
- Patient B has a high-deductible plan and hasn’t met any of it yet. They’ll pay the full cost of the procedure.
- Patient C has hit their out-of-pocket max for the year. They pay nothing.
The hospital has no way of knowing this without direct access to each patient’s up-to-the-minute insurance data. That data lives with the insurer, and not all insurers share that data in a timely or efficient manner.
The Administrative Burden and Risk of Inaccuracy
Not only is this regulation misdirected, it’s also wasteful and potentially harmful. When hospitals inevitably give an incorrect price for care, patients feel confused, angry, and misled, even if the hospital did its best with the information they had.
By putting the burden of pricing on hospitals instead of insurers, the system guarantees patients will get incomplete or inaccurate numbers, damaging the very trust the regulation was meant to build.
Insurance companies, not hospitals, have the full blueprint of a patient’s financial responsibility:
- They know the network status of the provider.
- They know how much deductible is left.
- They know the exact copay, coinsurance, and out-of-pocket max for that individual.
- They know if pre-authorization or tiered coverage applies.
- They know what negotiated rate has been established with that particular hospital or clinic.
In other words, insurers are the only party capable of giving a reliable, exact cost to the patient before care, yet the current regulation doesn’t require them to do so. That’s like asking the road builders what the tolls cost when only the navigation app knows what route you’re on, how many tolls you’ll hit, and what kind of car you’re driving.
What Should Be Done Instead?
If we want patients to have real price clarity, here’s the smarter approach:
- Require insurance companies to provide exact cost breakdowns to members for common procedures based on network provider, location, and plan details.
- Have insurers create integrated price estimate tools that hospitals can pull from.
- Have hospitals focus on transparent list pricing and cash-pay rates for uninsured patients, which they can accurately provide.
- Enforce clarity around patient financial responsibility from both sides, insurance must share the exact cost breakdown, and hospitals must confirm what services are being rendered.
If you need to know how long your flight will take, you don’t ask the baggage handler. If you want to know how much your mortgage payment will be, you don’t ask the home builder. Instead, you ask the person who would really know.
In healthcare, the right expert on out-of-pocket costs is the insurance company, not the hospital.
Well-meaning transparency regulations are important, but to be effective, they must be targeted correctly. Otherwise, patients will continue to be misled by numbers that may never be accurate to begin with.
When it comes to government intervention and encouragement on the journey towards price transparency in healthcare, we need to stop asking the road builders how much the tolls cost. In healthcare, that means putting cost responsibility where it belongs for most patients: in the hands of the insurer.