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Opinion writer

Bloomberg News reported Friday that UnitedHealthcare, the country’s biggest health insurer, is in a contract dispute with Envision Healthcare, which employs “25,000 emergency doctors, anesthesiologists and other hospital-based clinicians.” If the two companies cannot agree on a contract by the end of the year, that would make the medical group’s 25,000 hospital-based medical providers out-of-network for millions of people who receive coverage from the insurance giant. The likely result? “A flood of surprise medical bills” for all too many Americans in early 2019.

And Happy New Year to you, too!

This lousy dispute between two health-care behemoths offers many lessons in what’s wrong with the U.S. medical system. Americans spend just under 18 percent of the gross domestic product on health care, significantly higher than what’s spent by other first-world countries. But we don’t receive significantly better — or even marginally better — care. It’s not that Americans are a nation of hypochondriacs, seeking medical services at the merest sneeze. It’s that we are paying more for less. The reason for this? Instead of tackling this in a common-sense way adopted by other first-world countries — guaranteed health-care coverage, not-for-profit insurers and government negotiation for pharmaceutical prices — we outsource the job to the market, which many believe will magically find a solution to our health-care woes.

One way the market has attempted to get a grip on health-care spending is by offering a tier of medical providers who are deemed “in network” — the crux of the dispute between United and Envision. Those are medical professionals and organizations who have agreed to take a certain payment — usually lower than what the market would otherwise bear — from a health insurance company for their services. If consumers still use an out-of-network service, they are responsible for the difference in the price between what the insurer will cover and the provider will accept, something known as a surprise medical bill or balance billing.

The theory is that this simultaneously turns health-care customers into bargain hunters, while coercing the providers into taking the lower price in return for an all-but-certain stream of patients. The reality is somewhat different. Buying health care is not like buying a dress for a holiday party or a new car. Not only can you not do without it, it’s often purchased under duress. Insurance company directories listing in-network providers are frequently out-of-date, something the government rarely punishes. Doctors and hospitals rarely list prices in advance. Consumers and insurers frequently disagree on the definition of an emergency.

But consolidation in the industry — meant to offer each side more control — ultimately works to disadvantage consumers. Larger health insurers are able to pay medical practitioners lower amounts, along with charging higher premiums, a combination that’s fueling a wave of mergers among them. But medical practices and hospitals didn’t just take this on the chin. They are consolidating, too, so they can meet the might of the insurance industry with their own power. This increasing number of mergers by everything from hospitals to doctor practices is part of why health-care costs in the United States continue to increase at rates beyond inflation. That makes these practices quite attractive to Wall Street — Envision, the product of multiple mergers, is now owned by private equity firm KKR. And, it apparently doesn’t want to take the money United is offering them.

When insurers and health-care providers turn patients into hostages in their private dispute, one result is surprise medical bills. These shocks often turn up in situations where consumers have little control over who treats them, such as emergency rooms and the anesthesiologists selected for a patient’s surgery — two areas, it should come as no surprise to discover, in which Envision specializes. Just because a hospital is in a particular insurer’s network of facilities, that doesn’t mean the providers who work within it are, too. The idea that a patient should be expected to ask is ludicrous — but it’s what the U.S. system demands. A poll conducted this past summer by the Associated Press-NORC Center for Public Affairs Research at the University of Chicago found that 57 percent of Americans said they’ve received a bill from a medical professional they believed would be covered by their health insurer but discovered after the fact would not be. Another poll, this one by the Kaiser Family Foundation, recently found that just under 4 of 10 adults under the age of 65 received an unexpected medical bill within the past year. Not surprisingly, the same survey found more than two-thirds of Americans worry about the possibility.

It’s hard to avoid the suspicion that, in at least some cases, surprise medical bills are a deliberate moneymaking strategy. That was indeed the conclusion of a paper released last year by a group of researchers at Yale University, who found, among other things, that out-of-network billings for emergency room patients increased when EmCare, another employer of emergency room doctors, took over a hospital’s emergency room. In other cases, the doctors themselves are likely refusing to contract with an insurance company. After all, doctors can often receive more in the way of payment as out-of-network providers, in part because they can aggressively pursue their patients for payments. At the same time, many insurers are more concerned with minimizing their own payments to providers and less concerned about the financial well-being of their customers.

New York and a number of other states have taken on balance billing by, for example, protecting consumers from surprise bills when the hospital or medical facility they are treated in is in an insurer’s network, but the impact of their actions is limited because federal law prohibits them from imposing the laws on companies that self-insure — a strategy pursued by almost every major employer. Members of Congress from both parties have introduced legislation designed to make a dent in the issue, but their bills are languishing.

As a result, financial-medical horror stories continue to abound. (One headline that made the rounds this past summer was Life-Threatening Heart Attack Leaves Teacher with $108,951 Bill.) And every arbitrary surprise bill received seems to simply increase Americans' frustration with the current health-care system and fuel calls for systemic reform. One thing we can say for sure: Whatever the result of the battle between United and Envision, both the medical and insurance industries are too greedy for the greater public good.

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