Opinion

We Shouldn’t Tolerate Providers Price Gouging During a Pandemic or Any Other Time

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Posted: Apr 01, 2020 12:01 AM
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We Shouldn’t Tolerate Providers Price Gouging During a Pandemic or Any Other Time

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Like millions of Americans I am sequestered at home. My routine varies occasionally when I venture out to buy food, medicine or to look for toilet paper and hand sanitizer. At times I’ve found all the meat gone, dry staples gone and invariably all the toilet paper gone. These items were picked over by previous shoppers hoarding items others also needed.

I was incensed after reading the New York Times article about the Chattanooga men who hoarded nearly 18,000 bottle of hand sanitizer. They drove 1,350 miles across several states with a rented U-Haul buying up every bottle of hand sanitizer they could find. Their goal was to sell the items on eBay and Amazon to desperate shoppers, at prices 20, 30 and even 50 times what they paid. This practice is as old as time: it’s called price gouging.

During emergencies hoarders create artificial scarcities and price gougers fill the need at prices jacked up many times what the market would normally bear. Price gouging is illegal in most states during emergencies and Americans uniformly find the practice abhorrent. However, this is not the only example of price gouging Americans will encounter during this pandemic. Another practice that is abhorrent are surprise medical bills and price gouging for medical services, including COVID-19 treatment and diagnostic tests.

Many Americans experiencing a fever, aches, pains and a cough will go to a hospital emergency room because they fear they may have COVID-19. Perhaps they’re scared because a coworker was exposed or came down with the coronavirus. Congress is trying to limit cost-sharing for coronavirus treatments but did not put an end to price gouging. In the days, weeks and perhaps months that follow some patients will receive bills in the mail from doctors they never met saying they own hundreds or even thousands of dollars because they were treated by an out-of-network provider. This is especially true for anyone hospitalized.

Most patients who receive outrageous medical bills for lab tests, anesthesiology, radiology or pathology were never in a position to decline the service, because they could not choose their provider. Nor could they refuse based on network status or price. Patients are rarely quoted a price in advance unless their provider had to get prior authorization from their health plan.

Reading about price gouging during this pandemic got me to thinking: too much of American medicine is predicated on price gouging patients and payers, who have no choice in the matter.   Consider this: Many Americans select primary care providers based at least partly on network status. Do their doctors accept BlueCross, Aetna, Humana or Medicare? When their employee health plans change insurers every few years consumers invariably check to see if the physicians they’ve seen for years are still in-network. If not, they make decisions about whether to pay higher cost-sharing or to find new physicians. As a result of this dynamic, most physician specialties who are selected directly by their patients tend to join networks because refusing would reduce their income. Some other primary care physicians choose to practice Direct Primary Care and shun all insurance in favor of patients willing to pay for preferential service.

Where price gouging in medicine generally occurs is among those providers whose patients exercise little discretion over who cares for them. Patients don’t choose (and cannot refuse) their anesthesiologist, their pathologist, their radiologist or their emergency medical physician. Patients having a heart attack cannot shop for an air ambulance that is in-network (none are by the way). They often do not even have time to verify whether the nearest hospital ER is in-network. Neither can BlueCross, Aetna or Humana (or employer plans) refuse to pay an ancillary physician who refuses to sign a contract with them. This is a recipe for price gouging. Some provider specialties create scarcity by refusing to sign contracts with health plans and then charge prices well above median because they know their patients have no choice.  This is not a free market; in a free market each party has the right to walk away.

In the new stimulus bill Congress took baby steps to discourage physicians from sending surprise medical bills to their patients. It is too bad Congress did not take the opportunity to put an end to surprise medical bills for once and for all, along with the price gouging that springs from the ability to balance bill.