If You Like Your Doctor … Too Bad
Health care is one of the most critical issues that face the United States today. Leadership on both the left and the right have built cases around their preferred health care model, both of which present an example of government overreach that cannot be understated. Government can be notorious for making matters worse when it attempts to fix something. Like a giant trying to help with a cracked egg, the government is often more likely to crush that which it hopes to repair than to improve the situation.
This inability to function is also the case with the Lower Health Care Costs Act (LHCC), the crushing machine of government is taking away the choices of doctors and patients which is one step closer to a failed single-payer system like in Australia or England.
The LHCC is a bill intended to address the problem of surprise medical billings—a situation that occurs when patients unwittingly receive treatment from doctors outside their health care network. These unlucky individuals then receive enormous, unexpected medical bills as a result of their procedure. The legislation attempts to protect patients from devastating medical expenses by imposing a “median in-network rate” to guide the pricing of out-of-network procedures. Essentially, the rate would function as a price control, forcing hospitals and doctors to accept payment equal to what they charge for in-network providers.
This proposal would be devastating to physicians and care centers. Not only would the legislation strip away doctors’ rights to negotiate payment for their own services, but it would also substantially disincentivize medical professionals from entering the field. The LHCC would effectively function as an enormous pay cut, mandating that physicians work for rates far lower than they otherwise would.
A recent study by the Association of American Medical Colleges predicts that we will see a shortage of nearly 122,000 doctors, including 66,000 specialists. Do we really need to hurt these numbers more by forcing doctors to be beholden to insurance companies?
An Obamacare with greater protections for the insurance companies, the LHCC will benefit big companies. As it is a mercantile system under a different name, the LHCC creates an incentive for insurance companies to stiff doctors and hospitals, which will effectively stifle wage growth during a time where policymakers need to incentivize more doctors to enter the field.
We have already seen insurance companies become overly powerful in recent years. For example, in the auto insurance industry, it is no longer uncommon for adjusters to overrule police in fault, which almost always results in collusion and increased rates for the customer. Americans also saw how insurance companies reacted in the microcosm of Obamacare, as well as how they have been continually fined for failing to provide adequate network coverage.
Once the industry receives its median in-network price control under the LHCC, they will act just as anti-competitively, almost certainly exacerbating the physician reimbursement death spiral even further by refusing to renew contracts with even in-network providers above the new, median in-network rate.
If passed, the LHCC will be next in the line of failed government attempts to get involved in with something that it should never have involved itself with in the first place. HMOs, personal insurance plans, and Obamacare all failed because of the government’s failed attempts to manipulate the market. They have created a broken system that is allowing more and more people to slip through the cracks of the U.S. health care industry.
Currently, insurance companies are even controlling the information Congress is using to make a determination on the LHCC. The health care pricing and spending data was compiled by the Health Care Cost Institute, an organization “funded in part by four health care insurance companies.” Congress should be wary of the information that the HCCI provides, especially because they have a dog in the fight.
If the government wants to deal with this problem efficiently, it should place medical decisions back in the hands of the medical professionals. The best way to do that is through a system of arbitration. A bill entitled “Stopping The Outrageous Practice of Surprise Medical Bills Act” provides a good model for that process. To solve the problem of surprise medical billings, both the insurance company and the hospital would enter a negotiation wherein both parties would submit competing bids for what they viewed as the most reasonable price of the bill. An independent arbitrator would then be tasked with selecting the fairest bid among the two offers, ensuring both parties are incentivized to offer their best price. Through arbitration, conflicts are dealt with internally and there is no need for unnecessary government regulation. unnecessary government intervention is avoided.
Moreover, when an insurance company denies a needed treatment because of cost reasons, open them up to lawsuits. If a doctor can commit malpractice, so can an insurer. However, what we know without a doubt is that if Congress passes the LHCC, it will be committing malpractice against the American people.
Benjamin Alli, M.D., Ph.D., is a Sakellarides Professor of Medicine and Surgery and the Chancellor of the Royal College of Physicians and Surgeons of the United States of America.
