The stories abound: Patients break their legs, or have heart failure, or experience a mental health crisis, and they go to the hospital, as they’re supposed to. As is required in the United States, many of them diligently check to make sure that the hospital they go to is one that’s in their insurance network, jumping through these bureaucratic hoops as they’re suffering these awful symptoms. They get treated and go home healthy, ready to begin healing and return to their normal lives. And then they receive a bill for tens of thousands of dollars because the physician who happened to treat them at their in-network hospital was out-of-network. Many of these patients will never be able to fully pay the bill but will nevertheless make crushing payments to these institutions. How can this happen? How can this be A Thing at all, we ask?
For years, media outlets have covered the most unfortunate of these casualties of the American health care system, skimming off the most shocking examples of surprise hospital bills from among thousands of unlucky patients who won’t get articles written about them, and nothing has been done. In 2020, despite months of debate in Congress, this specific corner of insanity in our health care system remains firmly in place. Even as a global, once-in-a-century pandemic threatens our entire nation, members of Congress can’t sit down and pass something to fix this comparatively minor part of the overall problem in American health care. This week, Politico reported that any hopes that the next coronavirus relief bill might include some movement on this issue have been dashed—in large part thanks to disagreement among Democrats.
Congress appears “unable” to fix the issue, according to Politico, after House Democrats spent a month “trying to patch up intraparty differences” over who should pay for surprise bills—insurance or hospitals? But it’s not like compromise was an inevitable impossibility: A bipartisan bill, in fact, seemed on the verge of passing last year. Responsibility for this failure can be largely laid at the feet of Representative Richard Neal, chair of the House Ways and Means Committee. In December, Neal reportedly killed the compromise bill, in favor of one that was more friendly to doctors and hospitals (and lighter on details). Neal took $54,000 from lobbyists who represented groups and companies that opposed the surprise billing legislation and $29,000 from Blackstone, the private equity firm that partially bankrolled a $53 million ad campaign to defeat the legislation. Blackstone owns TeamHealth, one of the bigger purveyors of the surprise bill scam. Chuck Schumer is also “famously close with the Greater New York Hospital Association,” which donates millions to Senate Majority PAC, according to an essential piece by Daniel Block in Washington Monthly.
The supposedly intractable problem here—that neither insurers nor providers can be trusted not to bilk the other if they can’t bilk patients—is really a problem of our health care financing system. We don’t regulate the prices that hospitals charge, and we don’t have any kind of backstop to ensure consistent and adequate hospital funding. This leaves rural hospitals to wither and die, while providing the hospital industry a compelling argument for continuing the corrupt free-for-all—you don’t want your local hospital to close, do you? The aforementioned bipartisan bill, co-sponsored by Representatives Lamar Alexander and Frank Pallone, that Neal blew up wouldn’t even have come close to squaring the necessary circles—it only pegged prices to in-network rates for surprise bills below $750, leaving bills above that amount to be settled in arbitration, a setup that typically allows providers the opportunity to claw back more of the often fraudulent prices they arbitrarily set.
In the insurers-versus-providers fight on this particular issue, the insurers have the edge on the merits; hospital staffing firms owned by private equity firms whining about how they need to charge five times Medicare rates just to survive can simply eat it. It clearly makes no sense to allow hospitals to charge insurers whatever they like and force them to pay it, much as we might hate insurers. And if surprise bills are as inconsequential to their balance sheets as companies like TeamHealth claim they are, they should be able to handle getting paid a bit less in those rare instances. But as Block argued in his piece, even doctors who aren’t engaged in surprise billing are wary of these plans, because they believe it opens the door to wider rate setting, and that would bring the heady days of medical buck-raking to an end. A former hospital lobbyist told Block that American health care is like a wild animal: “[S]o long as there is food in front of it, it will eat it.” Congress is struggling to starve the beast, even though the food in question is pulled right from the wallets of patients.
Now everyone in Washington is pointing at each other, insisting that Americans need to be freed from the burdens of surprise billing, but no one seems to be willing to pull the trigger on a solution. Congress remains paralyzed by very powerful interests who claim that the most important institutions in the health care industry in this country will collapse in a fiscal heap if they aren’t allowed to maintain the status quo—even though it is so stupid, inefficient, and dangerous for patients that hospitals routinely back down from their demands on those rare occasions when an especially ridiculous bill finds its way into a reporter’s story. (Bear in mind, of course, that Congress’s half-hearted efforts have not included a measure to alleviate the burden of ambulance billing, which is the largest source of surprise costs.)
Despite all this disagreement, Politico reported that during last year’s battle over surprise billing, even opposing health care industry goons “agreed insured patients shouldn’t receive high bills when they’re taken to the emergency room or inadvertently treated out of network.” But while this principle is universally held among all the stakeholders, the problem is that someone loses out on the deal if the matter is resolved, so there’s no incentive to be the first to budge. It’s like that episode of Frasier where everyone agrees that someone needs to walk Eddie the dog on the day Martin returns to work, but no one wants to be the one who does it, ruining Martin’s big day. Competing health care interests all seem to agree surprise billing is a problem, but unlike the lovable Seattle psychiatrist, they will never willingly agree to a fix unless they are legally compelled to do so. This is why Congress exists: to mediate between the competing parties impartially. Instead, one powerful Democratic committee chair, with the blessing of Chuck Schumer, continues to blow the whole thing up—all while industry cash conspicuously finds its way into his campaign coffers.
There are many ways this could be resolved fairly and equitably for patients. Single-payer would be the ideal solution, but even without enacting Medicare for All, we could set the prices through the government, as Medicare does. Far less wide-reaching proposals were introduced during last year’s fight over surprise billing, like pegging prices to in-network rates. The problem is not intractable; the solutions might reduce hospital profits a tiny bit (according to the Congressional Budget Office, by something like 1 percent of revenue over 10 years), but they’d come with the benefit of not saddling patients with disastrous bills. Solving this dilemma isn’t difficult; it’s not getting solved because lawmakers have decided that a solution that upsets providers must be avoided at all costs.
Influential research from Yale in 2017 found that most hospitals in the U.S. had almost no out-of-network emergency room bills. But some hospitals—about 15 percent—were billing almost all E.R. patients out of network, and most of those were run by one company, EmCare. That means if you’re unlucky enough to live near one of these special Grift Clinics and need medical attention, you’re far more likely to be stuck with a big bill. TeamHealth claimed in a letter to senators in December that engaging in balance billing is its “only available source of contract negotiating leverage.” What this demonstrates isn’t that surprise billing is necessary to the survival of hospitals. It demonstrates that the entire system is very stupid.
The stupidity of the system isn’t limited to just these particular hospitals or one or two particularly scummy companies. In fact, surprise billing is just the tip of the iceberg. Any medical bill is a policy failure, whether it’s the result of a patient accidentally going to an out-of-network hospital or co-insurance incurred at an in-network hospital. Patients should not have any involvement in paying for their care, because everyone needs health care, no one can really shop around for it or predict how much of it they will need, and freeing patients of these impossible consumer burdens is the only way to ensure that health care will be equally available and affordable to all. Health care is a perfect example of something that is more efficient and more equitable for the government to handle on our behalf.
It is completely insane to pay for health care by having a thousand different insurance plans pay literally millions of different prices, at the same hospital, and expect that to produce a fair market with rational prices, or a just health care system overall. Over time, we’ve become inured to both the ridiculousness of this surreal scheme and the way that the lawmakers who might otherwise take the whip hand in creating a saner system of health care provision surrender to the status quo instead. The periodic debate over surprise billing has been a miniature example of the larger inertia. Everyone in Washington agrees that surprise bills are terrible, but as soon as hospitals get a little shirty, the political will to do anything about it evaporates.
It’s a collective failure that seems poised to continue. Unless, of course, it comes to pass that the lawmakers who are chiefly responsible for the impasse finally face some electoral consequences. In the particular instance of Richard Neal, his primary opponent, Holyoke Mayor Alex Morse, has hit the incumbent hard on this issue. Morse might yet prove that personally blowing up legislation to fix surprise bills could be the equivalent of walking around Boston ringing a bell and wearing a sandwich board that says “I Am a Bum, Kick Me Out.” Of course, Morse’s problem is that Neal’s campaign balance sheet is all the greener for having done so. This is, of course, just one race, but it’s a microcosm of what needs to be done if our nation’s pressing health care crisis is to be resolved: Voters will have to decide whose money ought to speak the loudest—the health care industry’s, or their own.