Congress Shouldn’t Sneak Insurance Handout into Next COVID Relief Package

While Congress debates a fourth relief package addressing the fallout from the COVID-19 pandemic, health care providers are risking their lives on the front lines to provide care for the sick. But instead of focusing on priorities like ensuring widespread availability of personal protective equipment for health care personnel, or on how best to provide relief for ordinary Americans denied the opportunity to work, some in Congress see this emergency as an opportunity to pass a so-called solution to surprise medical bills that would devastate an already strained health care system.

For health care providers, fallout from the pandemic is not limited to hotspots like New York City. Elective surgeries across most of the nation have been postponed indefinitely and physicians are seeing few patients in their offices to reduce the spread of disease. As a result, back line providers, such as dentists, pediatricians, and surgeons, are experiencing tremendous financial strain. Without the typical level of business, providers are having to cut costs by furloughing workers even as they attempt to prepare for a possible influx of coronavirus cases.

Against this backdrop you would think it insane that Congress would consider a dramatic change to the health care system that hospitals and doctors have consistently warned would be ruinous. Yet that is precisely what is happening as Sen. Lamar Alexander (R-TN), Rep. Greg Walden (R-OR), and Rep. Frank Pallone (D-NJ), with the backing of insurers, once again push their proposal to impose government rate-setting as the answer to surprise medical bills. Unfortunately, it is a case of the cure being at least as bad if not worse than the disease.

Doctors are not the only ones raising the alarm. A letter from the Coalition Against Rate-Setting, signed by 27 taxpayer and consumer protection groups, argues that “it is deeply disturbing that special interest groups are still seeking to promote legislation which will short change our frontline medical workers and lead to reduced accessibility to health care through the nationwide consolidation of health care facilities.”

Having the government set the appropriate rate for out-of-network services would introduce all the usual negative consequences that come with price controls, such as shortages, quality reduction, and rationing. Basing that rate on a median in-network rate would also create a perverse incentive for insurers to narrow networks to get the most favorable price.

This is not mere theorizing. California has tried the rate-setting approach and the results are dismal. A survey by the California Medical Association reports that physicians in the state overwhelming found that California’s surprise billing law accelerated consolidation of independent practices, reduced access to emergency care, and led to a narrowing of insurance contracts.

In contrast, an approach tested in New York has produced promising results. The state reports that over 4 years it has seen a reduction in out-of-network billing of 34 percent, for a savings of $400 million for consumers. To get this result they enacted an arbitration system known as Independent Dispute Resolution that relies on neutral health care experts to adjudicate conflicting claims between insurers and providers, incentivizing robust networks and compromise. Best of all, patients are left out of it.

A bipartisan bill (H.R. 3502) with 110 cosponsors, more than any other surprise billing legislation, would adopt the New York model. While this approach is not likely to prove perfect, it denies either insurers or providers a negotiating advantage and seems the best that can be achieved without a wholesale reimagining of our health care system.

The middle of a once-in-a-century health crisis is not the time to make far-reaching changes to the nation’s health care system. But if Congress insists on addressing surprise billing now instead of waiting until the crisis has passed, they should unquestionably choose the solution with a track record of success, and the most support within Congress, over the proven failure. A Congress grateful for the continued sacrifices of doctors and nurses won’t sell them out to the special interests of insurers.

Andrew F. Quinlan is co-founder and president of the Center for Freedom and Prosperity.