Price Controls Will Help Insurers, Not Patients
Ronald Reagan used to joke about the scariest sentence in the English language: I’m from the government, and I’m here to help. But let’s not forget the most expensive sentence in the English language: I’m from the government, and I’m here to save you money.
That’s what proposed legislation called the Lower Health Care Costs Act (LHCC), dubbed RINO Care by some in the limited government movement, promises to do – somehow save you money. What it will do is something else entirely. And we know exactly what it will do because it’s been done to us before. Remember the Affordable Care Act? President Barack Obama promised, "If you like the plan you have, you can keep it. If you like the doctor you have, you can keep your doctor, too. The only change you’ll see are falling costs as our reforms take hold." PolitiFact named Obama’s health care promise the “Lie of the Year for 2013.”
The LHCC arose in response to the rising and troubling issue of surprise billing, i.e., medical charges incurred for care not covered by a patient’s insurance plan. These charges are generally sustained when a patient requires urgent medical care, as in an emergency when you don’t have time to find out whether the physician offering the urgent care is in your network. The patient is treated, however the hospital bill and the costs for care are not paid. Although the patient has insurance, the insurance company refuses payment.
Many of the largest insurance companies, Anthem, for example, often refuse to pay for treatment deemed non-emergency after the fact. In effect, requiring the patient to self-diagnose and hope that the chest pains he's feeling are just indigestion and not a heart attack; or skip the hospital visit after an auto accident. If the patient gets it wrong, there are serious health consequences. Or, if the patient gets it right (and there are network or insurance snafus), the patient gets an outlandish bill.
These surprise bills are routinely colossal, often life-changing. Why? Because individuals do not have the leverage, like a big insurance network, to negotiate better price points.
The price negotiated by the insurance company is often half (or less than half) what a patient with a denied claim ultimately must pay. Such bills could cost a patient a life savings or their home. In other cases, the patient can’t pay at all, and doesn’t have any assets to seize, so the debt is either restructured for pennies on the dollar or simply written off. However, we all end up paying for that through higher premiums and greater medical costs. You pay more, and the entire health care system costs more.
Doctors, who often go into six-figure debt to become doctors and pay six-figure bills for obligations like medical malpractice insurance to remain doctors, also get stiffed. Their fees don't get paid. And in a time when doctor shortages are a real threat to our health, making it more difficult for physicians to practice medicine will only make our health care troubles worse.
There is one winner, though.
The insurance companies. By denying claims, they make money. Especially when they’re still charging the patients, whose claims they’ve denied, sky-high premiums for coverage they didn’t get. More, some patients never seek the care they need because they fear the denied claim. Big Insurance wins. Patients lose.
But wait … the Lower Health Care Costs Act will fix this unsustainable predicament of surprised medical bills. Right? Yes (sort of), in the same way the iceberg fixed the Titanic.
The LHCC does not require insurance companies to provide the promised coverage – coverage that cost thousands of dollars in premium costs. The new legislation does not set up an arbitration system to mediate between providers and patients when insurance won't cover a claim. No, the LHCC would impose a one-size-fits-all system that relies on across-the-board price controls for all medical services. At its core, the LHCC is no different than Bernie Sander’s Medicare-for-All or Obamacare – so-called health reform that would stifle innovation and hurt medical progress.
A supposed ‘median in-network rate’ would be charged regardless of the particulars of any health insurance plan. But instead of tamping down costs, it would shift them. And generalize them. For instance, insurance companies will simply raise premiums across-the-board. So, rather than some people getting a hefty surprise bill (an issue we can fix through patient-centric reform), everyone gets the bill in the form of higher costs, stifled innovation, and more health care dysfunction.
If the LHCC becomes law, we’ll all get a huge surprise bill: less care, fewer doctors, and higher costs. Doctors and hospitals will limit the care they give to firewall themselves against costs they can't bear and bills they can't collect. Only in Washington is the cure worse than the disease.
This is the inevitable result of price controls – less care, higher costs, limited access, and fewer innovations. There is a reason there were bread lines in Russia before the Wall came down; and it's the same reason people are still driving 50-year-old jalopies in Cuba; and why there are food riots today in Venezuela. It’s the reason why we have a crisis in our own Veterans Administration – government-care is too often no care.
Ultimately, price controls make everything more expensive. And it’s usually those who can least afford it who end up with the (surprise) bill.
Jerry Rogers is the founder of Capitol Allies and the host of “The Jerry Rogers Show” on WBAL NewsRadio. Twitter: @CapitolAllies.