Strange Bedfellows

California doctors and hospitals are fighting government oversight of health insurance premium rates and increases.

Yup.

Medical professionals are joining health insurance carriers in an attempt to derail the state's desire to regulate pricing in a fully competitive market.

Some may see this as odd, but I ask why not?

Does the state set the price of gasoline, food or shoes? All of these items are necessities and prices vary considerably. The price of these goods can literally increase overnight yet no one is calling for government regulation.

Why not?

“As physicians, we agree that controlling healthcare costs is important,” said James T. Hay, president of the California Medical Assn., in a statement. “But this misguided measure will cause higher rates and lessen access to care, which is why doctors, hospitals and healthcare providers oppose this measure.”

That is a valid argument.

When premiums are regulated the carriers are forced to restrict access to care and/or limit how much a medical provider will be paid for their services.

Some areas of the country have already noticed health insurance policies with restricted access. Most PPO plans have significant penetration when it comes to hospitals and doctors. It is not unusual for a PPO plan to include 90% of more of an area's hospitals and docs as par providers.

But in a cost saving measure, some carriers are now offering "Select" plans with lower pricing.

The catch is, you can only use hospitals or docs from a very small list. This approach is not just limited to major medical as many Medigap plans also have Select pricing models.

Under a Select plan you are free to use any provider, including those not on the approved list, but doing so will result in much higher out of pocket costs. While your access to health care is not technically restricted, the amount (and type) of care you can afford is restricted to those providers who participate in the Select plan.

Similarly, if doctors and hospitals agree to accept lower reimbursement in order to remain in network, they may also limit the number of new patients they are willing to accept from a particular carrier or plan. Existing patients affiliated with the cost restrictive plans may also see longer wait times before they can schedule an appointment.

C. Duane Dauner, chief executive of the California Hospital Assn., said chronic under-funding of Medicare and Medi-Cal by federal and state government was one of biggest reasons premiums keep climbing, because those costs are shifted to private health plans. “This initiative does not address government payment shortfalls,” Dauner said in a statement.

Isn't it odd how the insurance carriers are always blamed for rising health insurance premiums and cost shifting due to low reimbursement by Medicare and Medicaid is never taken to task?

Jamie Court, president of Consumer Watchdog, seized on the coalition’s disclosure that four health insurers — Anthem Blue Cross, Kaiser Foundation Health Plan Inc., Health Net Inc. and Blue Shield of California — were primarily funding the campaign. He said those four companies control 71% of the California insurance market.

I imagine the implication here is, these four carriers control the market and therefore they comprise a monopoly that needs to be regulated.

It never seems to occur to these folks that the reason WHY they control the market is because they deliver the MOST COMPETITIVE PRICING.

Free market pricing does not seem to register with these folks. Apparently they have never noticed gasoline signs where a station posts gasoline for $3.69 a gallon and right across the street you can buy gas for $3.65 a gallon.

Care to guess which station will sell more gas on a particular day?