Beware the Republican Road to Medicare for All
Was it only 10 years ago that the Tea Party forced Republicans to give more than lip service to the principles of limited government, individual liberty, and free markets?
Back then, even establishment Republicans felt pressure not just to oppose President Obama’s agenda but to repudiate the big-government conservatism of past Republican administrations.
Now, even former Tea Party champions are embracing budget-busting spending deals, new taxes in the form of tariffs, and gun control. The latest sign that the Tea Party is dead is that Republicans, after abandoning the effort to repeal and replace Obamacare, are now using real problems in the health care system to justify new federal mandates.
The legislation in question is Republican Senator Lamar Alexander’s Lower Health Care Costs Act (LHCC). The LHCC is designed to address the problem of surprise medical billing that President Trump has called out. This is where surgical patients are faced with huge, unexpected bills because one or more members of their surgical teams were “out of network.” Patients are not informed that insurance may not cover all the costs of their surgeries until they receive their bills. Many Americans have experienced financial difficulties because of surprise billing, which is a result of government policies that encourage over-reliance on third-party payers. This in turn has led to the rise of health maintenance organizations and the concept of “in-network” and “out-of-network” providers.
Since Congress caused the problem, Congress should fix it. However, the LHCC is a cure that’s worse than the disease. This bill would “fix” surprise medical billing by imposing a system of government-mandated price controls. When footing the bill for out-of-network charges, insurance companies would only have to pay the median in-network rate—an amount substantially less than the market price of health care services.
As is the case with all forms of federally imposed price controls, the bill would create both dangerous shortages and a bevy of perverse incentives. Most notably, insurers would be incentivized to eliminate higher-priced providers from their networks. In doing so, they could manipulate pricing metrics by relabeling those high-cost providers as “out-of-network.” Insurance companies will save money, but hospitals will be forced to restrict access to health care services, and patients will be hung out to dry.
The LHCC would only further encourage this rent-seeking behavior and strengthen the push for single-payer health care. Indeed, socialist countries like Venezuela first attempted to mitigate costs via price controls. Much in the same way, the LHCC’s central planning would create industry-wide chaos—the very justification the Left needs to remove the last vestiges of the market from our health care system.
The solution to surprise billing is to give patients control over their health care dollars via expanded access to health savings accounts and health care tax credits and deductions. This will end the over-reliance on third-party payers that created the problems of patients having to use “in-network” providers or else pay thousands of dollars in costs.
Another way to rectify the problem is through arbitration—private market negotiations between care centers and insurance companies. New York has gone this route, and according to the National Bureau of Economic Research, it reduced out-of-network billing costs by a whopping 34 percent.
The Lower Health Care Costs Act is gaining traction in the Republican Senate. Now is the time for free-market conservatives to prove they put principles ahead of party loyalty. They must convince Majority Leader Mitch McConnell to refuse to bring the LHCC to a vote. They also need to remind their Republican colleagues that they were elected to advance liberty, not take the country further down the road to socialism.
Dr. Ron Paul, a former congressman and presidential candidate from Texas, is the chairman of Campaign for Liberty.