Reuters U.S. President Donald Trump speaks about lowering drug prices with Health and Human Services Secretary Alex Azar.
- On Monday, President Donald Trump signed an executive order on price transparency in healthcare. The Trump administration trying to address the problem of high medical expenses.
- Federal agencies will begin developing policies and start issuing proposals within two to three months.
- Wall Street analysts are already working to figure out the impact the executive order will have on hospitals, doctors, drugmakers, and insurance companies.
- Overall, insurers like UnitedHealth, CVS Health, and Cigna could benefit while hospitals and providers could be negatively impacted, according to Wall Street analysts
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On Monday morning, President Donald Trump signed an executive order on price transparency in healthcare. The executive order aims to lower healthcare costs by showing patients the prices they'll pay when they get healthcare.
The goal is to help patients compare prices, so they can shop for more of their healthcare services and get care at a lower cost. The order also seeks to address "surprise billing," which occurs when patients get inflated medical bills from healthcare providers who don't take their insurance.
"Patients often lack both access to useful price and quality information and the incentives to find low-cost, high-quality care," the order states. "To make fully informed decisions about their healthcare, patients must know the price and quality of a good or service in advance."
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The order directs federal agencies to begin developing policies and to start issuing proposals within two to three months. Once the rules are proposed, companies and individuals will have a chance to comment on them before they go into effect.
Health insurers could benefit from price transparency
Wall Street analysts said they're skeptical the executive order will have a big impact on the key players in the healthcare system, but predicted that overall insurers will benefit while hospitals may get hurt.
Analysts at SVB Leerink said that health insurers like UnitedHealth, CVS Health, and Cigna may end up paying lower rates to hospitals and doctors, which would boost their profits. They said that others insurers such as Anthem and some Blue Cross Blue Shield plans could see less of a change, or even be harmed somewhat by the proposal
Analysts at Bernstein said that overall, greater transparency will lower healthcare costs. Hospitals and doctors could be forced to lower their rates, as patients will want to go to hospitals with lower costs, meaning hospitals and doctors could make less money, they said.
The Bernstein analysts said that hospitals are already grappling with a shift to value-based care, in which hospitals and physicians are paid based on the health outcomes of their patients. Currently, providers are largely paid based on the amount of healthcare services they provide.
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