Issues & Insights

How To Solve The Problem Of Surprise Medical Billing

Surprise Medical Billing arises when patients suffering from a medical emergency are rushed to a hospital that might be in network but employs doctors and health providers who aren. So the insurance companies refuse to pay their bills.

Patients, consequently, are surprised when they are held liable for those bills, which can run to thousands of dollars. They thought they bought insurance to pay for that.

What is a patient to do in this situation? Private insurance companies are going to have to decide if they are going to take responsibility for protecting patients from their medical bills. If they are not going to be functional in doing that, they can expect the government to take over their role.

If a patient takes the responsibility to become insured, paying the insurance premiums the insurer asks of them, then the patient should not be held liable for so-called surprise medical bills. There should not be any surprises once the patient pays for health insurance coverage.

If private health insurers are going to protect patients from socialized medicine, then private health insurance must protect patients from surprise medical bills. Otherwise, the government will succeed politically in taking over health care.

People forget today that it was private health insurers that sold the American people out to Obamacare, in return for the Obamacare health insurance mandate that required people to buy private health insurance by law. That unpopular, unworkable mandate has now been repealed and is headed in the courts on another round before the Supreme Court, which this time will likely hold it unconstitutional.

This coercive mandate failed to produce workable health care, as President Obama promised. If you like your health insurance, you can keep your health insurance, he said. But with the mandate, that turned out to be that if Obama liked your health insurance, you could keep your health insurance, as the workable health insurance chosen by millions of people was disqualified under the requirements of the mandate.

That led to soaring health insurance costs, just the opposite of the reduced costs Obama promised the American people. According to the Center for Medicare and Medicaid Services, when President Trump took office in 2017, average individual market health insurance premiums had already doubled compared to 2013, the year before Obamacare and its regulations went into effect.

In response, people who made too much money to qualify for Obamacare subsidies dropped their health coverage, with 2.5 million unsubsidized citizens dropping out by 2018. As an example, a 60-year-old couple in Nebraska making $70,000 a year was faced with paying $38,000 in health insurance premiums, over half their income, for a silver plan with an annual deductible of over $11,000.

Surprise medical building is comparatively a minor health coverage problem. That problem can be fixed by arbitration with the patients held harmless for any of the costs.

The doctors, hospitals, and insurance companies each bid for the share of the bill that they feel they can each bear. And the arbitrator picks the most reasonable bid among them. This gives each of them incentives to make the best bid that they each can hope the arbitrator will pick as the most reasonable

Problem solved, at no cost to the patient. No price fixing, no benchmarking, just free-market arbitration and negotiation among the big parties who can bear the costs.

That leaves the much bigger Obamacare problem still to be fixed. That needs to be decided by Congress after the next election, when the people elect a new Congress and president.

Then Congress can then decide on a new repeal-and-replacement plan to be proposed by the newly elected president. President Trump has already decided that this plan must protect patients from denial of coverage for pre-existing conditions.

That is a reasonable foundation for the new replacement system, which should involve hundreds of billions in reduced Obamacare taxes, spending, and costly regulation. Nice foundation for Trump’s tax cuts 2.0, which he has already proposed would involve all further tax cuts for middle-class working people.

Peter Ferrara is the Dunn Liberty Fellow in Economics for the King’s College in New York, and a senior fellow for the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under Attorney General William Barr and President George H.W. Bush.

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1 comment

  • i can remember affordable health care
    you did not purchase health insurance, you had something called major medical
    office visits were paid on the spot, often in cash
    Dr.s had to keep costs reasonable or go out of business [like everyone else]

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