Surprise Medical Bill Fix Would Make Blue Cross All-Powerful

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Both chambers of Congress are trying to address surprise medical bills. Yet, many of their proposals would outlaw doctor and hospital fees and allow health insurers – primarily Blue Cross Blue Shield – to pay whatever fee they choose. Such a one-sided solution is completely unnecessary and worse than the surprise billing problem itself. It would give Blue Cross, the nation’s largest private health insurer, near complete power over our $3.5 trillion health care system.   

Blue Cross is a federation of giant health insurance companies. In fact, there are 36 different companies under its umbrella. And it provides private health insurance to some 107 million Americans. In most major marketplaces, moreover, Blue Cross controls over half the private market share. As such, the in-network rates it sets are the median and predominant in-network rates for any given region. The Association even boasts on its website that it offers its coverage “in every zip code”. Because the private marketplace must also subsidize the discounted rates from Medicare and Medicaid, Blue Cross often determines whether physicians and hospitals can remain financially viable. Quite simply, Blue Cross is the dominant force in health care.

There is only one thing, however, keeping Blue Cross from completely controlling the U.S. healthcare system: the more than 800,000 doctors in America who each have a choice to accept or reject Blue Cross’s contract terms. If the terms and in-network rates are unacceptable to them, doctors or hospitals can remain out of network and issue their own fees instead. This last component of the health care system that Blue Cross doesn’t control is its final target.

The Congressional proposals that Blue Cross is pushing hope to accomplish this, and they are like the one they helped pass at the state-level in California in 2016. This has not worked out well for our nation’s largest state. Consumer complaints are significantly up regarding a lack of health care access. There are acute doctor shortages, and the government is putting up billions of dollars of taxpayer money to keep physicians in California. It’s become so bad that Sacramento is even offering to pay off doctors’ medical school loans to recruit them to practice in the state. California doctors have been completely demoralized by this law.

On the other side of this surprise billing equation, doctors and hospitals are advocating for the New York landmark law that was written by the state’s Department of Financial Services. It was agreed to by doctors, hospitals, insurers, and consumers. Five years after its passage, everyone is winning. The law eliminated surprise medical bills without outlawing provider charges or disrupting the little remaining leverage doctors have left with health insurers. New York is also not having issues with doctor shortages or problems with access to care. A recent analysis of New York’s law showed it saved consumers $400 million, reduced out of network billing by 34%, and lowered in network emergency physician payments by 9%.

Unfortunately, Blue Cross doesn’t like that. As such, you now see studies, “expert” opinions, TV ads, newspaper articles, and government estimates toeing Blue Cross’ line – namely outlawing all provider charges and forcing all providers to accept whatever rates insurers choose. Worse yet, the Association’s fingerprints are all over this seemingly fact-based analysis and reporting.

For example, Leonard Schaeffer, the founding chairman and former CEO of WellPoint (now Anthem), a Blue Cross member company, has given $3 million to the RAND Corporation, $25 million to the University of Southern California (USC), and $4 million to create the USC-Brookings Schaeffer Initiative for Health Policy. What does he receive for such hefty investments? “Authorities” on health policy, such as Loren Adler, associate director of Schaeffer’s initiative, produce “academic” studies promoting time and again Blue Cross’ position. These studies are completely one-sided. American patients and their providers deserve better.

Blue Cross’ tentacles extend further into our government, as well. The Congressional Budget Office (CBO) recently scored one of Blue Cross’ legislative priorities, the Lower Health Care Costs Act (S. 1895). Unsurprisingly, the CBO’s estimate completely supports Blue Cross’ position as sound policy and a real money-saver for government. Can you guess for whom CBO Director Phillip Swagel used to write studies? If you guessed the Brookings Institution, you’re right. There can be no doubt that the “non-partisan” CBO report was written in close collaboration with Blue Cross.

That said, when studies and analyses are not enough, Blue Cross is not afraid to use another weapon in its arsenal: intimidation. In response to the advocacy efforts of three private equity firms supportive of doctors and patients in the surprise billing debate, Blue Cross’s supporters in Congress launched an official investigation into these companies. The message was clear. Anyone who defies Blue Cross will feel the wrath of a Congressional probe, and, possibly, legal troubles. Most people in Congress are simply afraid of Blue Cross. That is scary.

To ensure Blue Cross does not become all powerful, Congress should use the New York law as its model for legislation to tackle surprise medical bills. There are already 95 bipartisan members of the House who have co-sponsored a bill, the Protecting People from Surprise Medical Bills Act (H.R. 3502), based on this model. Hopefully more members support the bill soon. If Congress passes Blue Cross’s preferred legislation, the Association will have then hit its final target. If that happens, all Americans can plan to start worshipping at the altar of the Blue Cross and kneeling at the feet of the Blue Shield. Americans should vigorously reject these false gods and kings.

Kerri Toloczko is a public policy analyst and Senior Policy Fellow at Frontiers of Freedom.

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