With more than a thousand confirmed cases of a respiratory illness caused by a new kind of coronavirus, millions of Americans are worried for the worst: a full-blown outbreak across the 50 states. At the time of writing, there are only a few confirmed cases in the United States, but the virus can quickly spread before the onset of symptoms.
Thanks to deeply flawed policy proposals floating around Congress, America’s healthcare system may not be well-equipped to handle the wrathful virus. Lawmakers and bureaucrats can ensure that doctors continue to treat patients quickly and effectively — but only if they ditch disastrous healthcare price-fixing schemes.
Currently, lawmakers are busy battling another pandemic: the unfortunate practice of surprise medical billing, which happens when out-of-network doctors treat patients at in-network facilities. Patients think that their insurance will cover their hospital stay, only to get a bill in the mail totaling hundreds or even thousands of dollars in the days following discharge. The culprit is mainly government intervention in the healthcare sector. About three-quarters of all insurance plans offered on Affordable Care Act exchanges feature “narrow” networks that lead to doctors falling outside insurer reimbursement. This results in patients being held responsible for the rest.
Despite the failures of federal fiat, lawmakers such as Sen. Lamar Alexander, a Republican from Tennessee, and Rep. Frank Pallone, a Democrat from New Jersey, have proposed getting the government even further involved by fixing prices charged by physicians across the country.
California tried a similar approach in 2017, but according to a 2019 analysis in the American Journal of Managed Care, this led to physicians taking a steep pay cut and corresponding consolidations across the healthcare market. Doctors reported considering leaving the state after losing leverage in negotiations with insurers post-reform. If Alexander and Pallone get their way, this slow-motion disaster would play out across the country just as the coronavirus spreads. Considering the track record of U.S. hospitals preparing for previous deadly viruses, the American healthcare sector will need all the help it can get.
According to a 2017 study by prominent epidemiologists, American healthcare facilities spent nearly $400 million preparing for Ebola cases during the 2015 epidemic. The researchers found that “the average amount spent by hospitals on combined supply and overtime labor costs was $80,461. … Small hospitals (mean, $76,167) spent more on staff overtime costs per 100 beds than large hospitals (mean, $15,737).”
These small facilities are disproportionately affected by the prospect of a major virus but may have more trouble this time around preparing for the worst. The American Medical Association predicts that slashing reimbursement rates to physicians as a part of a surprise billing “fix” would “hamper smaller hospitals’ ability to maintain adequate workforce.”
This, in turn, could put patient care access in danger.” This concern is borne out by interviews with California physicians working at small practices and small hospitals, who note that price fixing is “what clearly put it over the edge” in terms of consolidation. And when patients facing rapidly escalating symptoms have fewer healthcare options in their neighborhood, things can go from bad to worse in short order.
The reality is that policymakers looking for a lasting fix to “surprise billing” needn’t look to California’s flawed approach. States such as New York and Florida have implemented a market-friendly alternative known as “arbitration” to restore fair billing that puts patients first and government bureaucrats last. In these states, patients are not held liable for surprise bills, while doctors and insurers use a third-party, online mediation process to come to a payment resolution.
This process has proven largely even-handed for both parties. Patients can support a system that has reduced out-of-network billing by an astounding 34%. These changes can help patients while leaving providers the resources they need to prepare for the next deadly virus.
Congress can’t prevent pandemics, but it can ensure that America’s doctors and hospitals have the tools they need to put the public at ease.
Ross Marchand is the director of policy for the Taxpayers Protection Alliance.
