September 29, 2022

| Print Page | Send to a Friend Home > Media Center

Surprise Medical Bill Price Controls Would Harm Entire Healthcare System

Posted by: Andrew Langer on Tuesday, October 15, 2019 at 12:00:00 am

Surprise medical bills occur when patients have emergency or unscheduled services with out-of-network providers and the patients’ insurance companies decide not to pay the bills. The correct solution is for insurers to pay these bills if they are consistent with what other doctors are charging and being paid for out-of-network services. Insurers – led by Blue Cross Blue Shield – are pressuring Congress to outlaw all physician bills and allow them to pay a price of their choosing, the “in-network-rate” that they set. Such price controls would not only devastate doctors and hospitals, but also have profound and adverse consequences on the entire health care system.

 Part of the U.S. health care system already operates under price controls. The government imposes sharply reduced rates for the elderly and those less fortunate through Medicare and Medicaid. Doctors and hospitals can survive financially despite these price controls because of America’s robust private health insurance market. For-profit insurance companies pay at a higher rate. This is how providers survive. But why do for-profit insurance monopolies pay these higher rates? It’s to avoid surprise medical bills. Insurers offer doctors and hospitals higher rates than Medicare so that providers don’t reject their contracted rates and charge their usual and customary rates. And this is particularly true in emergency and unscheduled circumstances. This is how the health care market functions.

 If doctor and hospital usual charges are outlawed, and the insurer is allowed to pay whatever rates it chooses, these rates will quickly drop significantly towards Medicare rates. The federal and state governments would then have to step in to make up the difference in funding that would be lost from the private sector. This will require large tax increases. It would have all the downsides of a fully socialized system, without any of the benefits. The uninsured would remain uninsured. It would simply lead to big savings for private insurers, at the expense of everyone else.

Price controls can be effective in a modern democracy to ensure basic care for those in need. If every member of society is granted these same sharply discounted rates, however, it will lead to a system failure. Every college student can’t attend school on a big scholarship without massive government assistance. As such, every American can’t pay for medical services at sharply discounted rates – without a full and expensive takeover of the entire health care system by the government.



Leave a Comment

The Institute For Liberty 1250 Connecticut Ave, NW, Suite 200 Washington, DC 20036 P: (202) 261-6592 F: (877) 350-6147