- - Wednesday, March 22, 2023

Before President Biden’s State of the Union speech, the White House said he’d call upon the federal government to tackle “junk fees,” those hidden or unexpected fees that Americans pay each day. No one likes hidden fees in any transaction. They like to know the total cost of products and services they’re purchasing and do not want to pay for things they did not agree to buy.

With the federal government, though, nothing is that simple.

Laying the groundwork, the White House drew attention to Mr. Biden’s call for passage of the Junk Fee Prevention Act and rules proposed by the Consumer Financial Protection Bureau, Department of Transportation, Federal Communications Commission and other oversight agencies.

For them, the speech was a bonanza. It spurred press releases touting new regulatory proposals to tackle junk fees, either to explain earlier bureaucratic actions or to justify the president’s deficit budget requests. Something had to be done, they said, even if it is wrong.

To better understand the breadth and danger of government action in this area, look at the Federal Trade Commission’s Advance Notice of Proposed Rulemaking for Unfair or Deceptive Fees Trade Regulation Rule, Commission Matter No. R207011.

Expressing its willingness to go beyond Mr. Biden’s announced objectives, the FTC writes in its proposed rulemaking: “Based on the Commission’s substantial work in this area, the Commission’s initial view is junk fees appear to be prevalent in many sectors of the American economy.”

Dissenting was Commissioner Christine Wilson, soon to announce her resignation in a published op-ed. She said, “it is likely that a future rule will cover other industries not explicitly discussed in the ANPR,” specifically mentioning health care, where some states, such as Colorado, have forged ahead.

Remember that state actions often foreshadow federal regulatory moves. So, because Democrats in the Colorado General Assembly are now using the terms “facility fees” and junk fees interchangeably, their proposed H.B. 23-1215 steps right into the swamp.

It’s intended to eliminate some allegedly “hidden fees” hospital systems charge patients. That’s a reach. They cover every expense outside of direct physician costs, including nurses, nursing assistants, behavioral health therapists, social workers, care managers, pharmacists, environmental services, security officers and front desk staff.

They are also used to support clinics across the state that care for millions of patients each year, often providing specialty care, including transplants, neurology, cardiology, oncology, and behavioral health.

An accountant might call that overhead. Others who want to politicize the issue, such as Kim Bimestefer, the executive director of Colorado’s Medicaid department and a member of the governor’s Cabinet, have been making the “junk fees” argument for years. She’d rather the state set prices, one presumes, to give it control of the health care marketplace.

In reality, overhead costs go to supporting business without being directly related to a specific service or product. If the Colorado legislature prohibits the inclusion of supporting functions in patient billing, the result would be a decline in health care availability. That’s in a state that performs better than national averages and is considered among the best in the nation.

The Colorado proposal would starve its top-performing hospitals, shrinking access and services for the very people the legislature claims to represent. The FTC and other federal agencies risk the same kinds of adverse consequences in their attack on so-called junk fees.

The Institute for Policy Integrity petitioned for FTC rulemaking in July 2021, citing “drip pricing” — another term for junk fees, saying: “It is an unfair or deceptive act or practice and unfair method of competition to advertise or solicit the sale of a product or service without prominently disclosing the entire price to be paid by the customer inclusive of all unavoidable fees and service charges (excluding government taxes).” This is an uncomplicated goal that hopefully will not be ignored.

What must be avoided by the federal government is both regulations similar to the Colorado legislature’s exclusion of operating expenses or excessive regulations driving up costs and limiting products or services. The FTC and other alphabet oversight agencies should follow what is often attributed to the 1960s Navy’s design criteria acronym KISS, or Keep It Simple, Stupid.

In short, the government must keep the junk out of junk fee regulations.

• Todd Tiahrt is a former member of Congress.

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