Federal push for greater price transparency would likely affect insurers less, Fitch analyst says

The federal government's push for greater price transparency in healthcare would likely affect insurers less than other industry players, said Brad Ellis, senior director of health insurance at Fitch Ratings.

"The health insurance business model is less exposed to risk from price transparency than other parts of the healthcare system. Under the Affordable Care Act, health insurers are required to spend between 80-85 percent of their premium dollars on claims, which has kept their margins range-bound," he said in a statement. "More transparency may serve to enhance healthcare consumers’ understanding of the mechanisms that drive insurance premiums higher, including increasing healthcare unit costs and the growing use of healthcare services. Longer term, the goal may be to reduce premium rate increases by reigning in drug prices, standardizing healthcare costs and exposing the cost effect of healthcare decisions, but this is a downstream issue."

Mr. Ellis' comments come as President Donald Trump's administration seeks to require disclosures of the patient's total price of care up front, as well as the rates that insurers in the private-employer market negotiate with providers for services.

 

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