Concern about the spread of COVID-19 and its expected straining of health care resources has drawn attention to the problem of surprise medical bills. Members of Congress were already working on several proposals to address surprise bills but, faced with the possibility of a pandemic spreading throughout the United States, now should have even greater motivation.
Already it’s been reported that patients who sought testing based on reasonable suspicion that they may have contracted the coronavirus, and even some forced into quarantine by the government, have been asked to cough up thousands of dollars out of pocket.
In the battle between providers and the insurance industry, there’s blame to go around when it comes to responsibility for surprise medical bills. But nonsense like this makes it hard to deny that insurers are particularly bad actors.
No one should be shocked to hear that given how the industry lined up, eager to feed at the trough of Obamacare. After all, what could be better than a law mandating the purchase of your product regardless of quality or consumer interest? We know now what Obamacare has wrought. Costs are up. Insurance networks are shrinking. Independent practitioners are disappearing. So, anyone up for round two?
Insurers are betting they can make it happen. They’re backing government rate-setting as a so-called solution to surprise billing. This would allow the government to set the price for a service, and through benchmarking, would essentially outsource the process to the insurers themselves.
The benchmark approach, used in some proposals, sets the payment for a service based on the local median in-network rate. This provides an incentive for insurers to narrow their networks and unilaterally get the rate as low as possible.
Narrow networks, meaning those that include less than 25 percent of physicians in an area, already account for more than 70 percent of plans on Obamacare exchanges. Such plans are not without their merits, but they come with considerable risks. A diagnosis of serious illness, or even a new complication for an existing problem, might require going out-of-network to get access to the best, or even adequate, specialists.
Many aren’t even aware of such trade-offs. Almost half of those who first bought an Obamacare plan in 2015 reported no knowledge of the network configuration of their plan, according to Consumer Reports. No wonder surprise out-of-network bills are on the rise!
Any solution to surprise medicals bills must recognize the reality of the health care market. It is beset by government distortions that have led to high and opaque prices, and it is overly confusing to many consumers. More heavy-handed regulation will generally make these problems worse.
Addressing these problems requires a larger rethinking of health care policy than a surprise medical bill fix is likely to undertake. So, what can be done in the meantime?
One approach has already produced good results in New York, and that is independent dispute resolution. There, arbitration is entered whenever bills are disputed, with an independent expert choosing which price is most reasonable from those submitted by the provider and the insurance company.
It’s a system that encourages self-moderation, with each party knowing that unreasonable claims will result in the other being picked. Over four years it has produced a 34 percent reduction in out-of-network billing and $400 million in consumer savings.
On the other side, both geographically and on this issue, is California, where a 2017 law to cap bills based on the Medicare reimbursement rate has fueled consolidation and made it harder for patients to access doctors. It serves as a warning for the consequences of imposing price controls.
When issues like this gain sufficient political momentum, Congress eventually decides it must do something. After enough frustrated attempts at a solution, and if they are not careful, that can morph into a desire to do anything. It’s in these moments that the worst policies are often crafted.
If Congress can’t come up with better than imposing price controls, it would be best for patients that it just does nothing at all. Though let’s hope for the best, and that they keep working at it until they get it right.
Andrew F. Quinlan is president and co-founder of the Center for Freedom and Prosperity. He wrote this for InsideSources.com.