Economists Request Lawmakers to Oppose Healthcare Rate Setting

This picture taken on March 16, 2020 during a press presentation of the hospitalisation service for future patients with coronavirus at Samson Assuta Ashdod University Hospital in the southern Israeli city of Ashdod, shows empty hospital beds in a ward. - As of March 16, Israel has 255 confirmed cases …
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The Coalition Against Rate-Setting (CARS) released a letter Tuesday signed by more than 160 economists who oppose healthcare rate setting in any legislation, particularly any future COVID-19 relief legislation.

The letter was released after it was reported that Sen. Lamar Alexander (R-TN) and Rep. Frank Pallone (D-NJ) hope to include healthcare price fixing into “Phase 4” of the coronavirus relief legislation.

According to the letter, it is signed by economists who “believe that ‘surprise’ medical bills, which patients sometimes receive after they are treated by a provider unknowingly outside of their insurance network are a real public policy concern that policymakers should work to address.”

“No matter the policy area, government price controls often result in shortages and market distortions,” the letter stated. “These outcomes should be avoided, especially when dealing with important health care services like emergency room visits and physician care.”

Taxpayers Protection Alliance (TPA) President David Williams praised the economists who signed the letter, and said, “At this difficult time, it’s more important than ever that the federal government protects critical healthcare workers. Doctors and hospital workers are putting their lives on the line every day, yet some in Congress want to see their pay slashed overnight.”

Williams continued:

Members of Congress, such as Sen. Alexander and Rep. Pallone, are concerned about the pressing problem of surprise medical billing which happens when patients’ insurance fails to cover attending doctors at an in-network facility. But this very real issue would be made far worse by bureaucrats setting healthcare prices and putting all the power in the hands of large insurance companies. Patients need choices, not another failed federal foray into healthcare.

Williams also highlighted how federal price controls always result in “failure,” saying the “government has an abysmal track-record in dictating pricing and quality of care in the healthcare sector”:

As pointed out by the economists in the letter, federal price controls always result in failure. From Medicare’s failed ‘wage index’ experiment to the Indian Health Service’s byzantine pricing structures, patients have seen these price controls (and the ensuing chaos for patients and doctors) across the entire healthcare sector. And, now, even in the middle of the pandemic, gargantuan government programs such as Medicare and Medicaid continue to tie reimbursements to onerous regulations such as Certificate of Need laws, which force hospitals to ask state bureaucrats for permission before expanding their operations and serving patients. Clearly, the government has an abysmal track-record in dictating pricing and quality of care in the healthcare sector. But lawmakers have not learned their lesson from these cautionary tales, and instead are keen on doubling-down on healthcare price-fixing. Hopefully, members of Congress will listen to the experts and economists this time and reject rate-setting.

Williams also proceeded to call on legislators and the Trump administration to stand by those in the healthcare industry.

“Lawmakers and the Trump administration must continue to do everything they can to help healthcare providers help patients,” Williams said. “Enacting rate-setting across the country would shortchange the country’s doctors and hospitals and hamstring their efforts to contain the pandemic.”

“Elected officials should listen to the hundreds of academics who are rightly voicing their concerns with federal price-fixing,” Williams concluded. “Patients cannot afford another experiment in government-dictated healthcare.”

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