Congress is currently debating a big spending bill, and while the debate is ongoing – it looks like that at least in one aspect the American people have lost.
A provision called site-neutrality was dropped from the negotiation table. Site- neutrality proposes paying hospitals the same amount that independent doctors are currently paid, which is less – much less. In fact, the estimated savings from this change would be $150 billion over a 10-year budget window (even in DC, $15 billion a year is a lot.) With Republicans fighting to find every penny that they could to offset pet projects and party priorities, those billions could go a long way. But it seems that something got in the way.
Politics, back rooms, a complicated bill, a tight timeline, and presidential pressure all have created the perfect storm for lobbyists and cronies in Washington, DC. It reminds me of a scene from “Showdown at Gucci Gulch,” which paints the perfect picture of lobbyists loitering in the halls of Congress, waiting to ambush a member and push their issue. This is business as usual in DC and in some ways can actually be helpful.
But at the same time the average American, entrepreneur, or doctor can’t afford to loiter in the halls of Congress. They are busy putting food on the table, caring for their family, building their business, or taking care of their sick patients.
On the other hand, big businesses are operating on a different scale, and even though they may not oppose the small guy, it doesn’t necessarily make sense for them to fight for the small guy either.
It’s how we got this distortion in hospital pricing. The way that healthcare payments are currently structured, hospitals can charge up to 700% more than if the procedure was done by an independent doctor. That is like paying more for a shirt from Walmart compared to a small boutique. Even if they are the same quality, the small boutique has so much more overhead to provide the same thing that there is no way that it can charge the same low price as the big box store.
However, in healthcare the government treats these two venues in the completely opposite way, paying the hospital much more with the addition of a facility fee. This disparity effectively creates a slush fund for the hospitals that they have been using to buy independent doctor’s offices – making the problem even bigger, costing taxpayers even more money, and further warping the healthcare market.
As further evidence that the lobbying dark arts were involved with this change, just last Congress a bipartisan bill passed out of the house on the same issue. While that bill “only” saved $40 billion over the budget window, that $40 billion could have gone a long way as well.
While the current setback is frustrating – and it means that the current state of our healthcare system will continue consolidating – it is clear that we are closer to passing this idea and starting to reform healthcare. It just means that in the feeding frenzy and haze and confusion of a gigantic bill like the Reconciliation package, lobbyists still have power on Capitol Hill. There is no other reason that members of Congress would continue funneling taxpayer money to hospitals without care., It distorts the market, and drives up the price of healthcare for their constituents.
Fortunately, there is time this year and more opportunities. As Sen. Grassley often says, “sunlight is the best disinfectant,” and a smaller bill helps provide that sunlight. Patients deserve a healthcare system that works for them. Taxpayers deserve a healthcare system that isn’t paying exorbitant rates to businesses that don’t need even more funding.
In a perfect system, the federal government wouldn’t be involved at all. But if the government is involved, it should be paying rates that work within the free market system rather than paying artificially inflated rates so lobbyists can afford their Gucci suits.
Charles Sauer is president of the Market Institute and author of “Profit Motive: What Drives the Things We Do.”
