CA balance billing battle misses the point

This week, providers decided to sue over California's new rules barring balance billing. Providers--especially emergency department doctors--argue that they have to get their fees somewhere, and that insurance companies sure aren't going to fill their coffers.

Of course, it's easy to tell doctors and hospitals "hey, if you don't like the deal you have with the insurance company, that's your fault." After all, in theory, in a free market, two parties involved in a contract have no business turning to a third party (the consumer) and demanding that the consumer make either of them whole. (Out of network care and ED treatment are different, but I'll leave those for a separate discussion.)

In reality, though, free markets assume that there's no undue concentration of market power in place. And California, particularly, plays host to some of the largest, most dominating health plans in the country, including billion-dollar behemoths WellPoint and Kaiser. Not only do these plans have market dominance, they also have a great deal of control over their costs, including the right to reject or cancel members and cherry-pick healthy patients.

Providers, on the other hand, have increasingly fewer places to turn if they don't like the contract terms they're getting, a point state medical associations and the AMA have made forcefully over the last several years. Despite their complaints, virtually all of the mergers contemplated by health plans seem to win the approval of state and federal regulators.

As I see it, the truth is that balanced billing disputes are a sideshow. Until California regulators--and in all probability, president-elect Obama--takes on the issue of health plan industry consolidation head-on, there's going to be endless arguments that miss the point.

The truth is, it's time for serious consideration of health plan consolidation and its effects on healthcare cost, quality and access--and the FTC is going to have to gear up for some serious scrutiny of the industry. Until we have that conversation, we're not going to make much progress on a host of other important issues. - Anne