Another Heavy Government Hand over Health Care

by Wyoming Liberty Group Staff

Imagine someone walking into a hotel in New York saying "the same hotel room would only cost $80 in Wyoming, so you should only charge me $80 for this $250 room".

Absurd? Of course it is. The cost of doing business varies from state to state, even from county to county. Taxes vary, market wages vary, the regulatory burden differs. Competition, the purchasing power of the local market…

There are a whole range of variables that determine the local price of a good or a service.

Generally, we recognize this and we let the free market set prices. It has been a good part of what has made America an economically successful, prosperous country.

Unfortunately, government has a penchant for getting itself involved in the free-market economy. When it does, there are always unintended consequences that make lives worse for everyone, including those that government wants to help.

Nowhere is this more obvious than in health care. We have a long history of government involvement in how medical services are produced, delivered and paid for. The Affordable Care Act was the biggest government incursion thus far, and it left big scars in our health care system that still create problems to this date.

Congress is trying to fix those problem – an ambition they deserve a thumbs-up for. The problem is that they, again, want to do it in a way that will cause more problems than it solves.

And we here in Wyoming will take a hit from it.

The culprit is the Low Health Care Costs Act (LHCC). Andrew Quinlan, president of the Center for Freedom and Prosperity, explains that the purpose of the LHCC is to address the problem with surprise medical bills. The bill, Quinlan reports,

was passed out of committee on a bipartisan basis and has significant momentum. The bill represents a conglomeration of proposals address excessive healthcare prices. Unfortunately, when it comes to surprise bills, it offers provisions that amount to price controls and would exacerbate the problem rather than fix it. To limit surprise bills, LHCC mandates that out-of-network emergency care can charge only the local, median in-network rate. This forces hospitals and doctors into contracts they never signed and dangerously skews the balance of power toward insurers.

One part of health care that the LHCC targets is air ambulance services. Section 105 of the bill wants all out-of-network services to be priced as if they were in network. This would include coinsurance and deductibles as well. Pricing would be done on a median in-network basis.

Here in Wyoming we have already recognized that air ambulance services cost money. We would be in a good position to solve this problem in a productive way that does not expand government involvement. Unfortunately, we are already ahead of the federal government on this issue. Back in July, the Casper Star Tribune reported that the Wyoming Department of Health has drafted a proposal to have Medicaid take over payment responsibility for all air ambulance service in our state.

To make this the solution to the high cost of air ambulance services is to kill flies with a shotgun. The LHCC is better, but not by very much. Both Medicaid and the LHCC put the pricing of health care services in the hands of government. The Wyoming model would go as far as to socialize the pricing, while the LHCC would leave a token window of pricing freedom to the market.

The main problem with government control over health-care pricing is that it automatically means rationing of services. Medicaid is already notorious for rationing access to health care by underpaying health care providers; to have this program simply throw its blanket over an entire branch of health care services such as air ambulances, is to ask for rationing and runaway costs to taxpayers.

The LHCC will not do that – at least not upfront. However, this bill comes with its own problems, and they are not small. The worst of them is the creation of a big hole of financial uncertainty for health care providers.

Today, an out-of-network patient is welcome to seek health care anywhere, and the provider knows what money he will make accepting the patient. Just like any other seller of a product or a service, he is in control of his end of the price deal. Under the LHCC, a patient can walk in to a health care clinic, demand to be treated and also dictate what price the provider may charge.

Since each patient comes with a different in-network price list, the health care provider gradually loses control over some of his revenue.

This is the government-imposed version of pricing that hotel room in New York. The only thing worse than this would be if government took over the payment of all hotel rooms in the state – or the country.

A silly idea, right? So is the idea of having government take over the pricing and funding responsibility for an entire segment of our health care system, such as air ambulance services.

More government involvement is not the solution to the cost of our health care. That solution begins with peeling back layer after layer of government involvement, from the creation of Medicaid and Medicare onward through the decades to the Affordable Care Act.

It can be done. Let us hope for a good beginning. It would be great if Congress and President Trump decided to reverse course on the LHCC. Here in Wyoming, our lawmakers could take a big step in the right direction by saying no to more growth in Medicaid. A good alternative is the package of productive reforms to Medicaid that I proposed back in June.

We need more power in the hands of health care providers and patients, and less in the hands of insurance companies and government.