Insurance companies often use their substantial leverage to pressure doctors into restrictive contracts. These contracts can allow insurers to refuse to pay in-network specialists simply because the referral to see them came from a non-contracted (out-of-network) doctor. Such denials can happen regardless of the patient’s medical necessity and if the referring doctor makes no claim to the insurance company.

Not only is this tactic medically and financially harmful to patients, it vastly undermines patient choice. A doctor who chooses to work independently of the clutches of an insurance company could go out of business without the ability to make referrals to other doctors. Typically, consumers have no idea these insurance practices exist until they receive a “gotcha bill.”

States, however, have the power to protect patients from the strong-arm tactics of insurance companies. Maine, for example, passed legislation prohibiting insurers from out-of-network referral denials.

In fact, there are a host of reforms that states can take that would have an immediately beneficial impact on the patient experience. The Heartland Institute, in an updated edition of its American Health Care Plan, recently published ten such solutions that not only would lower health care costs but increase access to high quality care and move markets in a way that would be more centered on patients.

Although much health care reform focuses on the federal level, these state-based reforms can be accomplished quickly. Even under a reform-minded administration, like the incoming Trump administration, sweeping federal reform can take years and can effectively be undone after another election.

One of the easiest reforms states can accomplish is to repeal certificate of need (CON) laws. These laws, which were enacted decades ago in the interest of ensuring that health care facilities were widely accessible, have outlasted their usefulness and do more harm than good. CON laws prevent new hospitals and medical facilities from opening without the approval of bureaucrats.

According to the Alaska Policy Forum, CON laws can increase medical costs by up to 11 percent. Coupled with the Affordable Care Act’s (ACA) restriction on physicians’ owning hospitals, CON laws hamper innovation. Much of the innovation can come from facilities owned and operated by physicians banding together to better serve patients. For example, 24 out of the 43 “best” urologists judged by votes cast by 10,000 doctors in Atlanta, Georgia work in one such facility: Georgia Urology.

Moreover, increased competition leads to better price transparency. Have you ever tried to get a straight price on care from a physician employed by a hospital before the care takes place? Good luck. Often, hospitals don’t reveal the price until you see it on your bill. On the other hand, independent practices may not be hampered by pricing bureaucracy.

Of the 35 states that originally enacted CON laws, 24 have suspended or outright repealed them, preventing established hospitals from using government regulations to shield themselves from new competition. Unchallenged by competition, many legacy hospitals skate by with poor quality.

Another area where states can improve patient care is to remove the obstacle of so-called Prior Authorizations.

In 2022, Michigan passed legislation aimed at streamlining this time-consuming process. Yet for many medical practices, the reform hasn’t meaningfully alleviated the burden. Prior authorization paperwork still consumes substantial administrative time, diverting staff from patient care and delaying access to necessary services -- potentially endangering patients’ health.

There is a strong appetite for change as people grow increasingly frustrated with paying too much for too little in health care. States can lead the way by enacting sensible reforms that will lower costs, remove obstacles, and improve the quality of care.

Chad Savage, M.D., is founder of YourChoice Direct Care in Brighton, Michigan, the president of DPC Action, policy advisor to The Heartland Institute, and a policy fellow at the Docs 4 Patient Care Foundation.

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