One solution benefits patients and doctors, and one solution benefits insurers, lobbyists, and donors. Guess which one the House Ways and Means Committee just chose?
Friday morning, the committee produced its newest draft legislation to address the issue of surprise medical billing. And, while the committee has attempted to hide its intentions throughout this process, its goal is still clear: siding with insurance companies and their lobbyists. The committee is supporting informal price-setting policies, policies that are likely to break our healthcare system further.
Of course, surprise medical bills are indeed a real thing and a real problem.
They happen when an insured patient is at a hospital that their insurance company claims is in-network, but then the patient receives a separate bill from an out-of-network doctor that provided them with care. While these bills are infrequent when looking at the whole of emergency care, they do happen, and they are a symptom of a broken healthcare market for sure. However, there is also agreement from just about everyone involved that patients shouldn’t have to pay surprise bills out of pocket.
The healthcare market has developed this way for several reasons, and surprise bills are avoidable if Congress would take action to fix the market.
Instead, the House Ways and Means Committee is pursuing a Band-Aid approach that hands over most of the negotiation leverage over to insurance companies. In previous drafts, the committee’s abdication of power was even more overt: it just gave the insurance companies the ability to pay doctors at the median in-network rate. In this draft, the committee removes itself one step further from the dirty work by allowing for a third-party arbitrator to decide. But, of course, Congress, with some help from the insurance industry, has set up the rules of the arbitration to favor the median in-network rate.
In other words, this is merely dressed up price-setting.
Interestingly, insurers don’t come out of this power grab happy either. The draft bill also includes some woeful transparency language that won’t change healthcare much, but will allow members of Congress to claim that they support transparency.
The real issue with these provisions is that they are completely unnecessary.
There is a growing market in healthcare where there are no surprise bills, prices are fully transparent, and, most of the time, procedures are done with zero copay from the patient. In the last nine years, one company involved with this movement has gone from its first patient taking advantage of the new program to now more than 800 patients per month. And that is just one small example. Bundled cash prices are catching on around the country, and providers and self-insured companies are starting to make changes to the way they do business.
The Ways and Means draft legislation will further slow down this movement and create more chaos in the already chaotic healthcare market.
The simplest healthcare market is one where the patient pays the doctor directly. However, over time more and more people have pushed their way into this transaction, creating a labyrinth of layers and regulations between patients and doctors that make healthcare one of the most inefficient markets that can be conceived. The right public policy approach would address the market incentives that Congress has created that makes these layers attractive and sometimes necessary. Only then can we restore more efficiency to the market.
In an efficient market, such as, say, the market for candy bars, prices are transparent and there are no surprise bills. That’s why it isn’t necessary for us to regulate the Snickers market. Healthcare should be the same — but this supposed “solution” would only make matters worse.
Charles Sauer (@CharlesSauer) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.
