Don’t Bail Out the Insurance Giants with Big Government Price Controls
Lawmakers in Washington don’t plan to get much done this year. There’s a divided Congress, which always makes progress difficult. Besides, it’s election season, so they’d rather spend time trying to convince you to re-elect them.
They really just want one bill they can pass and then point to on the campaign trail to say: “See how I helped with your health care?”
Well, the big insurance companies that brought you Obamacare and surprise medical billing are eager to see these lawmakers succeed. The insurance giants are lobbying - hard - to make you pick up the tab for surprise medical billing.
The bills they’re likely to support include a Ways and Means Committee proposal that includes a mediation process for when insurers and out-of-network providers can’t agree on a payment rate, and the Education and Labor Committee’s proposal that would set payment rates using a blend of both arbitration and a benchmark.
Don’t be fooled by the words “arbitration,” or federal “benchmarks” on prices. The cost of health care in South Dakota has nothing to do with the cost of health care in southern California, they're very different markets. So such benchmarks are meaningless from the beginning.
Also keep in mind that surprise medical billing only happens when a patient thinks she is going to an in-network provider but is instead seen by an out-of-network doctor. It’s not the patient’s fault, since she probably had no choice what hospital she could go to (dozens are closing) or even what insurance provider to use (there are fewer than there should be).
Surprise medical billing is a consequence of Obamacare, which was sold as if it would solve problems like this. Instead it is making them worse. Insurance companies don’t really compete with each other because there are so few of them now. Also, because patients don’t control how their health care money is spent, there are few incentives to reduce costs. Market forces are largely out of the picture.
Meanwhile, the insurance industry’s goal is clear: Insurers want to use the issue of surprise medical billing to increase federal regulation of health care. Then the insurers can get to work squeezing down compensation for doctors and passing costs along to patients. The way that works is that once they’ve set a price floor, insurers can start pushing that floor down. Before long, doctors will be retiring or switching to other professions; a career in a lab may seem like a safer bet than one in an ER.
A group of doctors understands the dynamic, and has already weighed in with a joint letter to Congress. It explains that the solution being proposed “could lead to market consolidation and artificially low payment rates.” In fact, price controls are the end goal. Price controls are a proven loser that would make things worse.
Conservatives realize this. “About a dozen right-leaning groups have come out against the bill, including some of the most well-known fiscally conservative organizations in Washington, like Club for Growth and FreedomWorks,” The Hill reported recently. Expect to see more conservative opposition if the insurance companies get this ball rolling. Conservatives know the real solution to the health care problem is a free market, where costs are transparent, customers call the shot and prices reflect the value of care received.
Insurers are earning record profits under Obamacare, which is no surprise, since they helped write and support it. They are now lobbying to have new regulations on pricing put into place, moving the country farther away from the market solutions that could bring real change to health care.
We can’t afford surprise medical billing. But price controls in health care are even more dangerous. Conservatives need to work together to stop these bills and empower the free market, before it is too late.