Surprise Medical Bills: How to Protect Patients and Make Care More Affordable
21 Pages Posted: 28 Apr 2020
Date Written: April 1, 2020
Abstract
We examine the problem of surprise medical bills and consider how state and federal governments are addressing that problem. We note at the outset that surprise bills are not a problem in other markets. When you take your car to a body shop after an accident, the mechanic who paints your door panel doesn’t send you an inflated, separate bill from the body shop—and then balance-bill you when your insurance refuses to pay it in full. That isn’t because we have an elaborate system of arbitration for car door repairs. Nor is it because the government provides rate-setting for auto repairs, with different levels of payment for door panels than bumpers, and higher rates for fixing more expensive cars and trucks. Instead, there are no surprise bills from body shops because the market demands all-in pricing. Body shops respond by bundling all the necessary services into a single, all-in price and then billing for everything themselves. Why can body shops do what hospitals can’t? We argue that policymakers can use contract-forcing regulation to make hospitals behave more like body shops—and prevent the majority of surprise bills.
Keywords: surprise medical bill, contract forcing, arbitration, rate-setting
JEL Classification: I13, K23, K32,
Suggested Citation: Suggested Citation