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Enacting Price Controls to Address Surprise Medical Bills Will Crush Independent Doctors and Harm Patients

The opinions expressed by columnists are their own and do not necessarily represent the views of
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Independent physicians haven’t fared well in recent years. Obamacare’s high administrative burdens, along with added financial incentives favoring consolidation, devastated independent practices. As a result, the number of independent physicians fell from 62% in 2008 to 35% by 2014. Unfortunately, rather than remedy the damage federal policymakers have done to private practices, they are considering new proposals, this time to address surprise medical bills, that could prove the final nail in the coffin of independent practices.

Long the cornerstone of the American medical system, independent practices provide a high volume of care at lower costs, and produce better patient outcomes, compared to hospitals or large medical groups. The doctor-patient relationship is strongest in private practices where doctors have greater freedom to tailor treatments according to individual patient needs.

Obamacare created incentives for consolidation with the intention of shifting financial risk away from government programs onto doctors. The steep decline in independent practitioners is the result. Among other things, this means less local competition, which studies show results in higher prices and worse healthcare for patients.

The disturbing trend away from independent doctors will only get worse if Congress pushes through legislation to address surprise medical bills based on the flawed approach of imposing price controls.

There is widespread agreement that surprise medical bills, where an insured patient receives an unexpected bill for healthcare services, are a growing problem that needs a legislative fix. One study reports an increase in hospital visits resulting in a surprise bill from 32% in 2010 to 43% in 2016, with the average cost rising from $220 to $628 over the same period though in the most egregious cases they can run into the tens of thousands.

There’s less agreement over what to do about the problem. Insurers are pushing hard for rate-setting, which would put the government in charge of deciding what is to be paid for each procedure and force doctors to accept network rates even if they haven’t contracted with a particular insurer. This would discourage network building, while another proposed solution called benchmarking, or setting the payment based on a local average of networked rates, gives insurers an incentive to narrow networks in hopes of manipulating the rate in their favor.

These are bad ideas for those market-distorting reasons alone. But the fact that independent practitioners would suffer, despite not having substantial involvement in the problem of surprise bills that mostly result from emergency hospital visits, is especially troubling.

Health care markets don’t function well thanks to poorly designed government inventions. Price controls would make this problem worse and reward insurers for refusing to cover their customers’ treatments. It would also exacerbate negative trends that are harming patients by putting independent practitioners already struggling to cover the costs of regulatory burdens on life support.

Congress should step back and examine the issue more closely if this is the best it can come up with. Doing nothing is preferable to imposing price controls.

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