Senate's Lower Health Care Cost Act Repeats Worst Features of Obamacare

Remember the big lies of Obamacare?  One of the biggest was, “If you like your doctor, you can keep your doctor.”  But once Obamacare went into effect in 2014, consumers suddenly found that their health plans did not cover their doctors.  Unfortunately, a new bill before the U.S. Senate threatens to give insurance customers déjà vu all over again.

Dubbed the “Lower Health Care Cost Act,” the bill claims to protect recipients of unexpected medical bills that their healthcare plans will not cover.  In reality, it imposes price controls on insurers similar to Obamacare. The result could be more patients finding that their doctors are no longer covered by their healthcare plans.

Obamacare imposed a type of price control on individual markets called “community rating.”  Its unintended effect was to increase premiums for younger, healthier customers, causing them to forego insurance.  The result was health insurance “pools” comprised more heavily of older and sicker customers.  Those insurance pools were more expensive for insurers to cover.

One way that insurers tried to control costs was with what became known as the “skinny network.” Specifically, insurers eliminated the more expensive providers from their coverage networks and only covered cheaper ones. For example, one study found that access to specialists was up to 65 percent lower under policies on the Obamacare exchanges compared to pre-Obamacare insurance plans. As a result, many patients discovered that the doctors that they had seen for years were no longer covered under their insurance plans.

No one wants a repeat of that, but that is what the Lower Health Care Cost Act (LHCC) will give us.  Patients who receive emergency medical treatment from doctors and hospitals outside the coverage of their health insurance plan often receive unexpected bills for heavy expenses.  The LHCC uses price controls to force health insurers to cover out-of-network emergency service.  Specifically, when a patient receives treatment from an out-of-network provider, the insurer will have to pay the provider the median price that they pay their in-network providers for that treatment.

That price control creates perverse incentives for health insurers.  Insurers will be motivated to reduce the number of higher-priced doctors, hospitals, and other providers in their networks.  By eliminating those providers, insurers will reduce the median price they will pay for out-of-network emergency services.

The LHCC gives insurers another perverse incentive to eliminate higher-priced providers from their networks.  By removing such providers, insurers make those providers “out-of-network.”  If an insurer’s customers use those higher-priced providers, the insurer will only have to pay the providers the cheaper median price.

These incentives are the reason insurance companies are pushing hard for the LHCC. The insurers are even going so far as to provide Congress with studies to promote the LHCC’s efficacy. In fact, the studies into the issue were created by the USC-Brookings Schaeffer Initiative for Health Policy, an organization whose founding chairman is the CEO of the largest insurance company in the United States: Anthem.  

Should the LHCC become law, it won’t be long before more and more patients find that their doctors are no longer covered under their insurance plans.  This fact is not a mere inconvenience for patients.  In general, patients prefer a provider they know when it comes to dealing with sensitive health care issues.  The trust inherent in doctor-patient relationships is often built up over years.  The LHCC gives insurers an incentive to disrupt those relationships.

Even if LHCC becomes law, it is unlikely it will do much to protect patients from surprise medical bills.  The LHCC gives the U.S. Department Health and Human Services the authority to set up a dispute resolution process when insurers and providers disagree over whether a service should be covered.  Expect Health and Human Services to generate labyrinthian regulations governing the dispute resolution process, regulations that will be very easy for insurers and their attorneys to exploit.

Indeed, insurers frequently demonstrate their willingness to do just that. Recently, both UnitedHealth and Anthem BlueCross were embroiled in controversy over their lack of coverage for certain mental health and emergency services.  Despite being filed five years ago, a lawsuit against United for not covering certain mental health expenses was just recently resolved with the court ruling against the insurance company. Now, the case enters the lengthy appeals process.  The dispute resolution process under the LHCC will no doubt give insurers another means to delay and avoid paying out-of-network providers.  And when providers can’t get reimbursed by insurance companies, patients will get stuck with the bill.

The Senate should dump the LHCC and go back to the drawing board. Not only would healthcare costs increase, but insurance companies would also decrease their coverage. Ultimately, the LHCC would only amount to more broken promises. Let’s not repeat one of the worst features of Obamacare.

David Hogberg is a senior fellow at the National Center for Public Policy Research. He is author of Medicare’s Victims: How the U.S. Government’s Largest Health Care Programs Harms Patients and Impairs Physicians.