Independence and Free Market Under Attack in Texas
By: Carrie de Moor, MD, FACEP
Smoke and mirrors. It’s all smoke and mirrors.
There is a lot going on in the Texas Legislature surrounding “surprise bills” and “Freestanding Emergency Rooms”. The insurance industry would have the Texas Legislature and the public believe that they care about the well-being of Texans and that they care about keeping healthcare “affordable” for patients. However, nothing could be further from the truth.
We hear of “mediation” that will solve all of the problems for Texans against the ER doctors and their independent practices that save lives 24/7/365. Reality? 60% of commercially insured patients in Texas won’t benefit at all from anything that the Texas Legislature does. Why? Their health insurance is provided by their employer and their employer self-funds the claims. This means that the company pays the expenses for employees as they come up. Texas is a great place for large and small businesses, so it makes sense that these plans are prominent in Texas. These same employers contract “insurance companies” or TPAs (Third Party Administrators) to provide Administrative Services Only (ASO Services). Insurance companies do not take risk in this model. It is risk free – they are spending other people’s money. Very little incentive exists to keep healthcare costs down. In fact, the insurance companies want to see costs increase over time to increase their profitability per claim. This was one of the major reasons cited by Federal Judges for blocking the insurance company mega-mergers that we saw taking shape over the last year.
Self-funded plans are not governed by the Texas Department of Insurance (TDI). They are governed under a Federal Law called ERISA (The Employee Retirement Income Security Act of 1974) which means that the Department of Labor oversees these insurance plans to ensure that they are compliant with the law. As if that isn’t confusing enough, the Texas Employee Retirement System and The Teachers Retirement System fall in a separate loop hole. 29 USC 1003 allows for Government Plans like these to be exempt from ERISA- so it leaves them hanging without true oversight over their contracted third party administrator. These “insurers” have been running wild without clear oversight of their actions. They have created either increased costs to tax payers & self-funded businesses or shifted the added costs to the patient via extremely narrow networks.
If you can bring yourself to understand the paradox that insurance companies have moved to an administrative services model where they only benefit from rising costs of care and driving UP healthcare claims, it will open your eyes to the reality of what they have been lobbying for all along with the Texas Legislature.
Narrow Networks don’t save money. They force patients out of network to get care. With nowhere to go, they turn to Urgent Cares or ERs. When they can’t be seen by an In-Network doctor or Urgent Care, they turn to the Emergency Room- Freestanding ERs and Hospital ERs alike. Hospital based ERs are likely to admit patients 12-13% of the time. Freestanding ERs slash that number below 5% with innovative services like Observation Medicine and increasing access to care which decreases the length of time to treatment- which can mean the difference between admission or no admission, or even the difference between life and death. It can also mean savings of tens of thousands of dollars per avoided hospital admission.
The health insurance industry has misconstrued the data and facts so much that they have convinced many legislators to abandon their fundamental party principles. A current rider on to SB-1, would disincentivize Texas State Employees from seeking care at independent Freestanding ERs and incentivize them to seek care in hospital owned ERs. The Senate Finance Committee is trying to find ways to save Texas taxpayers money on healthcare expenditures for State Employees. However, they have been given misinformation that was distorted by the insurance companies providing third party benefit administration (TPA). Freestanding ERs charge less across the board. Yet, the TPAs have found ways to drive the cost UP for Texas. Independent Freestanding ERs have been kept out of network and are now being framed by the insurance companies as the source of the increased costs. Texas law mandates that Freestanding ERs see and treat anyone and everyone regardless of their ability to pay in the event of an emergency. Yet, the proposed rider to SB-1 would widen the insurance coverage gap for Texas State Employees and leave Freestanding ERs holding the debt burden that the employees can’t afford to pay.
This provision of the rider to SB-1 is anti-competitive, promotes poor behavior of TPAs, promotes narrow networks that drive-up costs of care, and restricts the free market and choice for place of care for Texans. It also allows the State of Texas to require services without adequate reimbursement- basically claiming imminent domain over small businesses.
Ultimately, the goal of the “insurers”/TPAs is to wipe out any model that provides increased access to cost-effective care. When the free market that exists today is eliminated, Texas tax payers and businesses in Texas will feel the impact in a big way as costs sky rocket. The same thing occurred to pharmacies and drug prices with the rise of PBMs (Pharmacy Benefit Managers).
Texas Legislators must protect fair trade in Texas and stop and ask important questions, instead of taking the word of insurance companies whose goal is to increase their own profits via administrative relationships with the State of Texas.
When healthcare become easily accessible and affordable on a cash pay basis, it makes insurance companies obsolete. Transparency in healthcare is exactly what insurance companies don’t want. They want to obscure how they are driving up healthcare costs. Texas tax payers are paying more for healthcare than they should, but state employees and teachers are not being covered adequately as promised. Instead, insurance companies are posting billions of revenue off of government contracts and convincing our legislature to assist them in eliminating the competitive market that keep healthcare affordable.
Dr. de Moor is a Board Certified Emergency Physician, President of the American College of Emergency Physicians Freestanding Emergency Centers Section, and Chief Executive Officer of Code 3 Emergency Partners