Should insurance companies be able to pressure you into using their own health care providers?

MINOT, N.D. — The fundamental problem with the American health care system is that those who ultimately receive the care aren’t in the driver’s seat.

When we go to the doctor or are admitted to the hospital, we aren’t really the customer for the care.

According to the American Medical Association

, in 2020, just 9.4% of all health care spending came directly out of pocket. Most care was paid for by private insurance plans or, far more often, the government through programs like Medicare and Medicaid.

Even most of us on private insurance plans aren’t really in control. Employers pick the insurance plans employees use. We may get to make a few choices around the edges, but for the most part, we take what we’re given.

This lack of choice is why health care costs have spiraled, growing at a rate that is multiples of other household expenses, such as rent, clothing, food, and even energy. Market forces, like competition among providers, keep prices in check. Or, at least, they keep them from growing as fast as they could.

But market forces are predicated upon individuals making choices. How many choices do we have regarding health insurance and health care?

Not many.

And, increasingly, as the health care and health insurance industries become indistinguishable from one another, the choices available to us narrow.

Taken medical industry behemoth Sanford, for example. That organization operates hospitals and clinics that provide care, sure, but it has also entered the health insurance market. Now it’s using the price pressures that are possible thanks to this vertical integration to limit the choices we have when it comes to health insurance.

It works like this: A vertically integrated health care and health insurance company will offer an insurance plan with coverage for both in-network and out-of-network care providers. That’s pretty typical stuff. But then the company will also offer a plan with cheaper premiums that doesn’t include coverage for out-of-network providers.

Who are the in-network providers? The company’s own doctors and clinics and hospitals, of course. Health insurance customers are being lured into locking themselves into a situation where their insurance company is also their health care provider.

This raises important ethical questions: How can your health insurance company serve you objectively if it’s also your care provider? How can your doctor be an advocate for the best choices for your care if they are also working for your insurance company?

These questions are at the heart of the debate over

House Bill 1416

, introduced by Rep. Dwight Kiefert, a Republican. If passed, the law would state that health insurers, including Medicaid, “may not obstruct patient choice by excluding a health care provider licensed under the laws of this state from participating on the health insurer’s panel of providers if the provider is located within the geographic coverage area of the health benefit plan and is willing and fully qualified to meet the terms and conditions of participation, as established by the health insurer.”

Part of the push behind this legislation is coming from independent doctors and clinics who don’t want to be frozen out by vertically integrated health care and health insurance companies. So, yes, there’s some pecuniary interests at play here.

But there’s also a public interest in protecting competition among healthcare providers. What little of it is still possible, anyway.

This bill doesn’t stop health industry giants from vertically integrating (though perhaps that should be on the table). Instead, it merely seeks to prevent health insurance companies from putting barriers between patients and their choice of care providers.

Sanford, as you might imagine, opposes this bill, and their flacks are arguing that it will stifle market innovation and drive up prices.

“House Bill 1416 that would essentially erode the ability of health plans such as Sanford’s, from offering those affordable health insurance options in North Dakota,” Dylan Wheeler, one of nine lobbyists registered to represent Sanford at the current legislative session,

said in a recent television interview

. “It would inhibit our ability to innovate, create, and deliver affordable health insurance options.”

That’s rich, coming from the representative of a company looking to squeeze out competition from independent care providers, but it also seems false based on the facts.

Two years ago, in 2021, the Legislature considered a similar bill. It passed in the House, but was amended into a study in the Senate. State officials have been scrutinizing this, including the state’s Public Employees Retirement System, which contracts with Sanford for health insurance for state employees.

A consultant report to PERS (see below) found that the “impact of the proposed legislation could be immaterial” since most of the state’s care providers are covered by most of the state’s insurance policies anyway.

I suppose companies like Sanford could argue that future cost reductions could be achieved with plans that ice out independents in favor of their own care providers. But if that costs health care consumers choice, if that creates a conflict of interest between our care providers and our insurance providers, when they become the same entity, is it worth it?