Everyone’s heard that you can’t fight City Hall. If the government decides to rip up your street, or the local utility decides to tear up your lawn, it’s going to happen. They have the power and you do not.
It’s like that in health care as well. In recent years, the number of health insurers has dwindled as existing companies buy up their competition. That means the remaining behemoths have more power to set prices and deny services. Few people have any choice.
The last thing we should do is give the already-mighty insurance companies even more power. But that’s exactly what a proposed law, the Lower Health Care Costs Act, would end up doing.
To be sure, at first glance the bill looks as if it might harm insurance companies by imposing price controls that cap what the companies may charge for services. But don’t let that fool you. The bill’s attempts to protect insured Americans from surprise medical bills (when they’re unknowingly sent to out-of-network care centers) would actually hand more power to insurance companies.
Price controls may bite at first, but insurance companies will be able to stop renewing contracts with certain hospitals and drive compensation down over time. Of course, they’ll then raise premiums (as they do every year) to increase profits. It won’t be long before insurance companies are larger and more powerful.
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And that’s just what they could accomplish if they behave ethically.
Often, big insurance companies are willing to risk fines by simply denying coverage that they are contractually required to pay for. The list of offenses is probably endless, but here are a few examples to prove the point. Maybe you have your own experience.
In any event, it’s obvious that when insurance companies collude, patients lose. So the way to prevent patients from being hit with big, surprise medical bills is to crush collusion and encourage competition.
As one solution, the federal government could implement a process of arbitration. In New York State, for example, payment disputes are settled this way: The hospital names what it considers a fair price, and the insurer names what it considers a fair price. Then an independent arbitrator selects one option or the other.
This creates price pressure on everyone -- if one side goes too high and loses, it gets far less than would be fair, so both sides are likely to come in with fair offers. The customer (patient) wins.
A similar act is currently under consideration in Washington, The Stopping The Outrageous Practice of Surprise Medical Bills Act, sponsored by Sen. Bill Cassidy. It certainly represents a better approach than the Lower Health Care Costs Act.
If the federal government really wants to encourage competition, it should open up the market and allow different types of insurance, especially plans that are bought by individuals rather than paid for by employers. People could buy plans specifically to protect themselves against emergencies and big bills. Power would flow from insurance companies to insured Americans.
Everyone knows that insurance giants are looking for ways to deny coverage. If you forgot to dot an I or cross a T, they can refuse payment. If you were taken to see an out-of-network provider at an ER, they can deny the entire bill. They’re drooling over the possibility that federal price controls will give them even more control of the health care market. Americans shouldn’t fall for it.
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