The Surprise Billing Debate May Make You Uncomfortable
This is how healthcare legislation works in America: a compromise on top of a market failure on top of a market incentive.
At least, that is how we got to the current moment in the debate over surprise billing.
It is one of the only political issues in America where Democratic-Republican divides will offer little to no insight. In fact, the two leading proposed solutions to surprise billing both have bi-partisan groups of legislators backing them. Clearly, the divide here is not left vs. right.
What is surprise billing?
Surprise billing is the result of an ongoing power struggle between insurers on the one hand and doctors on the other. In this particular battle, doctors are loosely allied with hospitals and healthcare providers.
Here is the essence of the problem: when a patient goes to a hospital that they know to be in-network, they are often unaware of the fact that many of the individual services provided in that hospital may actually come from sub-contracted groups that are not in network. Thus, a patient shows up at an emergency department and ends up with two bills: one from the hospital (in-network) and one from the physicians group staffing the department (out-of-network).
What’s going on is a market failure: patients can decide what hospital they go to, but not what groups within that hospital they get treatment from, especially not if it’s for an ER visit. When the patient has no choice in the matter, that means the physicians groups in question have a captive customer that is completely non-responsive to price changes.
[Coming in a future post: how completely price-insensitive healthcare consumers drew private equity groups into the market in a big way - and what those private equity groups got wrong.]
Who are the bad guys?
Given: a system that leaves patients going through the worst moments of their life subject to market failures heaped on top of market incentives is a pretty terrible system.