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Executive Orders Are Not the Best Way to Lower Prices and Maintain High Quality. But a Healthy, Robust Marketplace Is.

By George LandrithFrontiers of Freedom

Unexpected expenses are never welcome and no one likes a costly surprise.  So it isn’t surprising that there has been a lot of talk in Washington and Congress about “protecting” patients from surprise medical bills.  And if rumors swirling around Washington are true, the Administration will enter the fray with an announcement about an executive order that will supposedly “fix” the surprise medical billing problem.  This may sound good, but in reality it won’t be good news despite the Administration’s best intentions.  In the end, a government “solution” will simply drive out and crowd out market forces which if allowed to work would not only solve the surprise billing problem and reduce costs to consumers, but also maintain the highest levels of quality and incentivize innovation in our healthcare system. 

The most common cause of a surprise medical bill is when a person uses a healthcare provider that is not in their insurance plan’s network of providers. While it doesn’t happen that often, it is a real challenge for consumers when it does happen. Insurance companies have contracts with healthcare providers to provide medical services at discounted rates. That makes them “in-network.”  The “out-of-network” providers charge a price without any pre-negotiated discounted rates which means the out of network costs are greater. 

These circumstances, no matter how rare, are used by politicians to make us think they are proactively solving problems for our benefit. Sadly, they are doing nothing of the sort. One only needs remember how President Obama and Vice President Biden repeatedly promised that they would save us all thousands of dollars every year and allow us to keep our health insurance and our doctor.  Obviously, Obama and Biden failed to deliver on that promise.  It was the lie of the year even as judged by liberal fact checkers.  Literally, millions of Americans lost their preferred plans and virtually everyone saw their health insurance costs increase — not decrease by thousands.

So a healthy dose of skepticism about promises to fix surprise billing with government price controls is entirely justified.  Government imposed price controls skew incentives and reduce the availability of quality healthcare.  To make things worse, government imposed price controls also reduce the likelihood of future healthcare innovations and slow the development of promising medicines and procedures.  But the bad news doesn’t end there — government mandates almost invariably shift power to government bureaucrats and health insurance companies, rather than giving consumers more control over their own healthcare. 

And it is fair to ask what is the government’s track record on reducing costs?  And on top of that, government mandates will do nothing to reward innovation or to empower consumers.

The marketplace — and the negotiations that take place when you have two or more parties all trying to maximize the value that they receive — has a knack for providing high quality goods and services for the lowest possible prices. That is the process that has brought us smart phones that have more computing power than was used in the 1960s in the Apollo program. Today, the average American eats better and spends a lot less to feed themselves than our great grandparents did.  We also have access to all manner of foods — something even kings didn’t have a few generations ago.  Additionally, we work far fewer hours to obtain that food. This is the power of the marketplace and the innovation that it encourages. 

We need to harness that market power which will deliver high quality and low prices in the medical arena. Because the government has historically been such a big player in the medical field and because it is always arguing for a larger and more powerful role, we will see less quality and higher prices than the marketplace could have provided. 

Instead of continuing to empower government, let’s try reforms that put economic power back in the hands of healthcare consumers.  Where’s the proof that government run schemes produce the needed quality and lower costs?  Let’s trust the marketplace to do what it does so well — boost quality and keep prices comparatively low.  We trust the marketplace to provide us with food, housing, technology, and a thousand other things. Why not healthcare?


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