Last year, Todd, a Knoxville father, wrote to me after taking his son to an emergency room after a bicycle accident. His son was treated, Todd paid a $150 copay because the emergency room was “in-network” for his health insurance, and they headed home.
So Todd was surprised when he received a bill later for $1,800 — because even though the emergency room was “in-network,” the doctor who treated his son was not.
One in five in-network emergency-room visits result in the patient receiving a surprise medical bill like Todd’s. Across the country, patients are being hit up for hundreds or thousands of dollars, months after they received care, because doctors they didn’t even choose were outside their insurance networks.
Surprise medical bills are one of the most visible health-care problems for the 200 million Americans who have insurance through their jobs or on the individual market, and Congress should act to fix it. If Congress cannot address even obvious market failures in private health care, a federal takeover of our entire health-care sector will become that much more attractive.
Last month, the Senate’s health committee passed the Lower Health Care Costs Act, by a vote of 20–3, to end this practice. Here’s how it works.
Insurance companies already negotiate with doctors, hospitals, and other health-care providers to establish in-network, market-based rates. Under the bill, providers who don’t join insurance networks would be paid the median, or middle, amount set in each local market. The Congressional Budget Office estimates this approach would save taxpayers $25 billion over the next ten years.
This legislation does not allow the federal government to set rates. Nor can insurance companies unilaterally set rates. The market will set a price that reflects the cost of providing care in that area.
Some believe that the federal government should instead establish a new system of third-party arbitration for settling billing disputes. Others would have the government pick one rate and then increase that every year by adjusting for inflation, even if health-care costs decrease.
I believe the Senate’s solution, which protects patients and empowers local markets to determine the price of health care, is the best way forward.
This is a proposal targeted at a small number of doctors — less than 5 percent — who liberal and conservative economists alike (from Zack Cooper at Yale, to Loren Adler at Brookings, to Ben Ippolito at the American Enterprise Institute) have found are intentionally staying out of insurance networks so they can charge patients exorbitant prices.
Over the last year, many of my colleagues, including Senators Bill Cassidy, Maggie Hassan, and Lisa Murkowski, have led the way on protecting patients from surprise medical bills, and have lit a fire under Congress to end this harmful practice. President Trump has also called for an end to surprise medical billing, saying, “For too long, surprise billings . . . have left some patients with thousands of dollars of unexpected and unjustified charges. . . . So this must end.”
Avik Roy has written in Forbes that “if we do nothing [to address surprise medical bills], the problem will get far worse. If we do something that is too incremental, we’ll pat ourselves on the back and then be forced to revisit the problem in a few years. Americans deserve market-based alternatives to single-payer health care. Without reform of exploitative hospital prices, we’ll never get there.”
It is time for Congress to take action to protect patients from surprise medical bills, and I believe the approach in the Lower Health Care Costs Act is the least intrusive, most market-driven, most effective way to do so.