A few years ago, my daughter became suddenly ill with abdominal pain and I had to take her to a doctor. I have relatively good health insurance through my employer (since I’m American that is my only viable option). The rules of the plan were:
- Go to primary care physician
- If primary care physician refers you to an in-network specialist, then it will be covered.
In case of a true emergency (e.g., spurting blood), you can bypass this procedure, but the case should be clear cut.
Seems simple enough to me, and it’s a means for insurance companies to control costs by using a lower-cost physician to screen problems in a medically competent manner. I followed the rules, and the primary care physician said that he strongly suspected appendicitis and referred her to a nearby in-network surgeon to do further screening and possible surgery. He had her admitted to the hospital across the parking lot from his office, where she spent 24 hours but was ultimately released (she turned out not to have appendicitis).
The surgeon was probably annoyed by this since he didn’t get to charge his big fee for the surgery, and when he issued his bill a month later, it was for about $800 more than what the insurance+deductible would cover. When I called the insurance company, I was told that his contract with the insurance provider did not allow him to charge more, and that his acceptance of the referral constituted an agreement to whatever the insurance company would pay. I therefore refused to pay the excess to the doctor.
The surgeon’s office continued to send us bills for the excess charges, and after a couple of months started making constant phone calls to my home. I stood my ground and refused to pay, explaining it to the office manager that they were in breach of a contract that gave them the referral. The surgeon’s staff eventually referred it to a collection agency, causing it to show up on my credit reports. I stuck to my guns and refused to pay, and eventually they simply stopped trying to collect.
The dynamics of the marketplace were apparent to me at the time. The doctor wants as much money as he can get, but he can’t get patients without agreeing with an insurance company to get new customers. The insurance company doesn’t have any incentive to help me enforce the contract, and I’m not a party to that contract. They simply ignored the problem. I had no way to shop for a doctor, given that my daughter was in intense pain and might have a serious condition. The marketplace basically failed to exercise any cost controls, and I lay the blame squarely at the feet of the insurance company. They offered me no assistance in enforcing their contract with the doctor, and they took no punitive action against the doctor since the following year he was still listed as an in-network doctor. They behaved rationally, because they had no incentive to do so, either through regulation or through market forces.
So for those of you who tell me the marketplace works to control health care costs, please explain what market mechanism would work here. I concluded at the time that insurance companies need more stringent regulations, and I still believe it. Either that or a public option.