Moneybox

Democratic Leadership Showed This Week That It Can’t Be Trusted With Health Care Reform

Richard Neal gestures from behind a podium with Nancy Pelosi and other House Democrats beside him.
House Ways and Means Committee Chairman Richard Neal, who at the last minute seems to have scuttled a deal to prevent surprise medical bills.
Mark Wilson/Getty Images

Finally, some unity: In a country divided along stark partisan lines, just about everybody in Washington seems to agree that Congress needs to protect Americans from the scourge of surprise medical bills, the unexpected and sometimes crushing charges hospital patients face when they unknowingly receive treatment from a doctor who doesn’t accept their insurance. Democrats. Republicans. The president. They all say something ought to be done. And for a moment, it appeared as if lawmakers might actually move on a bipartisan proposal dealing with the issue before the end of this year.

Those hopes have now died. Thanks to a last minute dispute between House Democrats, surprise billing legislation was cut entirely from the massive, year-end spending measures that passed this week. Capitol Hill won’t tackle the issue until next year, if ever.

This is a debacle. Despite overwhelming public desire for a fix, Democrats appear to have caved to the lobbying efforts of hospitals, doctors, and private equity groups, raising questions about their willingness to put patient interests above those of their donors, and whether their leaders in the House can be trusted with any significant health reforms going forward.

Surprise medical bills have become an increasingly urgent political issue as stories have proliferated about Americans facing demands for thousands of dollars from doctors they had no say in picking, and might not have even met. They occur when patients visit a hospital that accepts their insurance, but end up treated by an out-of-network physician. The reason this can happen is that many doctors aren’t directly employed by the hospitals where they practice and so aren’t required to accept all of the same health plans that the hospital does. Surprise bills are especially common after emergency room visits, but they can happen when patients plan their procedures ahead of time too, if, say, the anesthesiologist on call just doesn’t happen to take their Aetna PPO. All told, surveys suggest that 1 out of every 6 insured hospital patients ends up with a surprise bill, and almost half of Americans say that either they or their family has been hit by one at some point.

This is what makes surprise billing so uniquely Kafkaesque, even among the many horrors of the American medical system: The bills victimize people who do everything right. You can pay for insurance, pick a doctor carefully, make sure the hospital where you have scheduled your procedure takes your coverage, and still end up on the hook for more than $100,000 because an assistant surgeon who didn’t accept your insurance swooped in to the operating room while you were unconscious. True story.

The sheer unfairness of it all, and bipartisan voter support for fixing it (78 percent of Americans have said they would like to see a federal bill) is why both Democrats and Republicans basically agree that something needs to be done. Moreover, it’s an issue that only Washington can fix. States have taken steps to protect some of their residents from surprise bills but can’t fully address the issue because of a federal law that prevents them from regulating most large employer-based health plans. If Congress doesn’t act, nobody can.

Lawmakers have debated two main approaches to dealing with the problem. Both of them would force insurers and out-of-network doctors to work out a deal when surprise bills pop up, instead of sticking patients with the tab. But under one system, referred to as “benchmarking,” the government would decide how much the insurance company would pay physicians, possibly based on their median in-network rates. Under the other approach, the two sides would go to a baseball-style arbitration over it, where both sides pick a dollar figure, and a third party decides the final number. Insurers and patient advocates prefer benchmarking, because it would keep costs lower. Doctors and hospitals prefer arbitration, because they believe it’s more likely to keep payments higher (or at least, that’s how it’s worked out in New York, where the approach has been tried).

This conflict between insurers and providers has led to an absolutely ferocious lobbying battle over the past year. But while the effort to defeat benchmarking has been fronted by sympathetic doctors, some of the most important behind the scenes players have been large private equity firms. These investment groups own major for-profit physician staffing companies that hospitals often hire to run their emergency departments and make a good deal of money from surprise billing. They’re fighting to preserve an essentially predatory business model.

By the beginning of December, though, it seemed that Congress had settled on a bipartisan compromise, which was announced by Lamar Alexander, the Tennessee Republican who leads the Senate health committee, and Reps. Greg Walden and Frank Pallone, the lead Republican and Democrat on the House’s Energy and Commerce Committee.* The legislation would have used benchmarking to deal with smaller medical bills but allowed arbitration for ones over $750. “I do not think it is possible to write a bill that has broader agreement than this one does among Senate and House Democrats and Republicans on Americans’ number one financial concern: what they pay out of their own pockets for health care,” Alexander said at the time.

But late last week, things fell apart. The public trouble started when, out of the blue, the House Ways and Means Committee, led by Massachusetts Democrat Richard Neal and Texas Republican Kevin Brady, introduced its own proposal, a one-page document that included few details but emphasized the arbitration approach preferred by doctors and private equity firms. The Hill described it as a Democratic “turf war.” And ultimately, surprise bills legislation was tossed from the end of year spending bill. Sources told the New York Times that “it did not have strong enough support from the Democratic leadership.”

One way to look at this mess, as Margot Sanger-Katz at the Times argues, is that it’s a “cautionary tale” about the difficulty progressives will face passing any major health care reform that threatens to cut pay for hospitals and doctors. Insurers and pharmaceutical companies are easy to beat up on. ER docs are another story, even when their lobbying efforts are actually backed by big Wall Street players. If Democrats can’t take them on with an issue like surprise bills, where they have plenty of public support, it’s hard to imagine them imposing the massive payment rate reductions envisioned as part of “Medicare for All.”

But beyond the tough optics of taking on the doctor lobby, this also seems like a story about the power of donors over some influential Democrats—particularly Neal, the Ways and Means chairman. Health care providers have long been some of his largest donors, which is unsurprising, since his committee has jurisdiction over Medicare. This year, however, he received a $29,000 donation from the Blackstone Group, the private equity giant that owns TeamHealth, one of the country’s largest physician staffing firms, which stood to lose out from Congress’ compromise bill. As Kaiser Health News reporter Rachel Bluth notes, this was the first year Blackstone showed up in Neal’s top five donors.

Neal could not have scuttled this legislation without permission from other senior Democrats, such as Speaker Nancy Pelosi. But nonetheless, it’s hard not to see this as a powerful Democrat, who will have a say over any major health care legislation his party puts forward, carrying water for his donors at the expense of patients. How can progressives trust a politician like that when it comes time for bigger health care reform? And how can they trust party leaders that let him get away with it?

Correction, Dec. 18, 2019: This post originally misidentified Rep. Greg Walden as Greg Ogden. It also misstated Walden and Frank Pallone’s parties. Walden is a Republican, and Pallone is a Democrat.