In the William Faulkner story “As I Lay Dying,” our clueless band of hillbillies know they need to put a cast on their brother Cash’s broken leg, but they have no idea how to do it. So they pour cement directly onto the leg but without first putting anything underneath. It’s a potential solution to the problem, but it’s done wrongly with disastrous results.
We see this phenomenon a lot in government, where the proposed solution makes matters worse. The so-called Affordable Care Act (colloquially Obamacare) with its high-premium, high-deductible model has helped insurance companies make record profits rather than magically conjuring an endless supply of free medicine.
It looked like the Trump administration might fall into a similar trap, of pouring cement straight on the wound so to speak, in addressing the persistent problem of surprise medical bills (SMB), but luckily, they didn’t.
Patients get hit with an SMB when they get an operation from an in-network surgeon, for example, but the anesthesiologist is out of network. They thought everything would be covered, but surprise! it wasn’t. SMBs are godsends to highly profitable insurance companies, since they don’t have to pay benefits, but they’re awful for patients, providers, and hospitals.
It looked like the Trump administration was going to address them last week with an executive order that would have mandated price controls in a mindblowing expansion of government in health care. Thanks to some pushback by health care groups, Republican lawmakers and others, the White House chose instead to issue a much more limited executive order urging Congress to act on the issue.
Price controls and burdensome regulation are a tempting way to fix a problem like SMBs and of course they are a problem but it’s the wrong solution. The fight against price controls has brought together doctors, many economists and even some sane Democrats. One of the things that’s amplified the problem are narrow insurance networks, since the smaller the net the more likely a patient will encounter an out-of-network provider. This is a problem that Obamacare, cement on the broken leg of American health care, has exacerbated given that about 75% of Obamacare plans feature narrow insurance networks, according to a report by the Coalition Against Rate Setting.
Particularly during a time of pandemic, when health care resources are already spread thin, rate-setting would be a disastrous path to pursue. Rate-setting leads to widespread consolidation of hospitals and drives doctors out of business, leaving millions without access to any care at all. California tried implemented price controls in 2017 with predictably disastrous effects, according to a 2019 study by the American Journal of Managed Care. Chasing doctors and others out of California did not make health care better for Californians.
So much of this problem is symptomatic of the government already being too involved in health care. Much like when the federal government stepped in to start financing higher education, broader intervention some of it well-intentioned, some of it simply a power grab like Obamacare the more the feds try to dictate health care policy to 330 million people, the worse our system gets.
But at this point, extricating the federal government from our health care system seems like, well, pulling dry cement out of a broken leg. The better solution to SMBs is arbitration.
Under arbitration, patients are held harmless and must pay only in-network rates when they’re hit with a surprise bill, and any cost beyond that is divided between the provider and the insurer. If they can’t agree how to split it, they go to arbitration. But that costs time and money, so all involved parties have an incentive to come to an equitable solution quickly.
Sen. Bill Cassidy, Louisiana Republican, has introduced a bill to make arbitration the solution, so let’s hope Congress takes up this issue, which is a better place for it to happen than a top-down executive order. Mr. Cassidy’s would also apply to out-of-network emergency care.
It is tempting during a pandemic and an election to go with a health care “fix” that sounds good in a headline but has a lot of devils in its details. The president and his team were right to resist this temptation rather than play into the Democrats’ hands with a price-setting mandate. It’s a potential solution to our expensive health care problem, but it’s wrong.
• Jared Whitley has worked in the U.S. Senate, the Bush White House and the defense industry.
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