With healthcare open enrollment underway, people are attempting to divine their healthcare needs for next year and pick the health plan that corresponds to them. Despite diligently researching their options, many people fear their plans will not guard against unexpected medical costs and surprise billing — when a patient is treated at an out-of-network facility or by an out-of-network provider and receives a shocking bill their insurance doesn’t cover. The issue has received attention in Washington, with plans introduced in both the House and the Senate to combat this.
President Trump has called surprise billing one of the biggest concerns people have about healthcare, and he’s right: A recent Kaiser Family Foundation poll found that 39% of people were very worried about surprise billing and 29% were somewhat worried. The administration announced several principles to address the issue, but mostly left the details up to Congress to solve.
Unfortunately, many Washington-centered approaches rely on “benchmarking,” which is nothing more than government rate-setting, to blunt the effect on patients. While it may help inoculate patients from bills up front, it will ultimately undermine its own goals of securing affordable treatment by putting pressure on provider networks and thinning the availability of in-network doctors. This is because the competitive nature of the relationships among hospitals, providers, and insurers is one of the most compelling forces for keeping prices in check. Healthcare facilities must be attractive places for providers to offer their services while demonstrating value to insurers who are searching for the best deal on care for their networks. This tension works when each of the players involved has a limited, but compelling, amount of leverage over the other.
Government rate-setting destroys this leverage by mandating the prices that can be demanded for services. While this might seem like an appropriate response to prevent patients from receiving outrageous bills, it effectively severs the tension that keeps all the parties in check in price negotiations. The result may be fewer “surprise” bills but also diluted coverage as providers drop out of networks they can no longer afford to participate in.
This will disproportionately hurt vulnerable communities in rural or underserved areas that have already seen their provider networks weakened after years of federal healthcare mandates. In fact, according to Georgetown University, less than 11% of physicians practice in rural areas, even though 20% of the country’s population resides there. A recent study concluded that these and other healthcare disparities contribute to over $100 billion in medical and economic costs each year. A mandate for government price controls as broad as what is currently being contemplated at the federal level would exacerbate these risks for all.
Contrary to some of the proposals under serious scrutiny in both the House of Representatives and the Senate, Congress should instead pursue solutions that force the private sector entities involved in these disputes to come to a resolution before the patient is even exposed to out-of-network-care. This would include requiring providers who work at hospitals to either be in the same networks as those facilities or for hospitals to shoulder the cost of an out-of-network-provider. This would preserve the negotiating power of the healthcare actors involved while protecting patients from surprise billing.
The Trump administration announced in May this should be a priority for Congress, and chatter on Capitol Hill has indicated a surprise billing fix could make its way into the end-of-the-year funding bill. While the Beltway doesn’t seem to agree on much these days, shackling the last legislative train leaving the station with policy changes that wouldn’t survive scrutiny under the normal legislative process continues to be a time-honored tradition in D.C.
People should be very concerned that an eleventh-hour deal where politicians link arms to cast a vote in favor of a quick surprise billing fix could result in more costs and much more difficulty in finding care for healthcare consumers in 2020.
Mattie Duppler (@MDuppler) is a contributor to the Washington Examiner‘s Beltway Confidential blog. She is the senior fellow for fiscal policy at the National Taxpayers Union. She’s also president of Forward Strategies, a strategic consulting firm.
