Friday February 10, 2003

COMMENTARY: Labor Law Provides Possible Solution to Hospital Disputes with Insurance Companies | EDITORIAL: Cruel. Petty. Vindictive | READER POLL: What Issues Are Most Important to You?

COMMENTARY: Labor Law Provides Possible Solution to Hospital Disputes with Insurance Companies

by Ben Litchfield - Stafford

Families in our area – mine included – are experiencing a considerable amount of fear and anxiety as Anthem Blue Cross Blue Shield (“Anthem”), the largest commercial insurer in the Commonwealth of Virginia, continues to fight with the Mary Washington Healthcare System (“MWHS”) over insurance coverage.  The hospital system ended its contact with Anthem because it believes that it is not being compensated fairly.  The insurance provider, in response, argues that the hospital system is trying to raise prices several times higher than the rate of inflation.  This dispute is nearly identical to the clash between Cigna and MWHS in May 2021 that ended up with Cigna being considered out of network for six months until the two companies could reach a compromise.

Caught between Anthem and MWHS are working families who want to continue seeing their doctors without having to pay substantially higher out-of-network fees.  Most Americans are a car repair or medical bill away from bankruptcy.  Over 100 million – 41% of adults – are burdened with medical debt.  Most of these debt is carried on high-interest credit cards, payment plans to hospitals and other medical providers, or loans from friends and family.  Over a quarter of adults owe more than $5,000 and roughly 20 percent of adults say they’ll never be able to pay off their medical debts.  Families have cut spending on basics such as food and clothing, used up their savings, taken on extra jobs, and delayed major milestones like seeking an education or buying a home.  All of that is with health insurance.     

The health insurance industry has experienced significant consolidation over the past several decades making these kinds of fights between corporate giants more likely.  Hospital mergers, which are supposed to bring lower prices to patients through improved cost efficiencies and economies of scale, and the purchase of smaller medical practices by large health systems, have resulted in the creation of large, interconnected health systems that have driven up medical costs as most systems enjoy near-monopoly pricing power in a market where patients typically need healthcare and are willing to seek care regardless of the cost.  For example, the MWHS owns more than 500 practices, providers, and hospitals in the Fredericksburg region according to the Free-Lance Star.  

Likewise, insurance provider mergers have created an oligopoly of a few firms that operate on a national scale.  High barriers to entry, particularly network effects and substantial regulation, give these companies near-monopoly pricing power.  Simply put, working families are stuck. They can't switch providers because there aren't enough market players, or because they get their insurance through their jobs or a healthcare exchange. The open enrollment periods for switching coverage are limited, too. These debilitating dilemmas are what economists call “lock-in effects.” And they are harming far too many working families.

Even if the Biden Administration is successful in blocking further consolidation in the healthcare industry, patients will continue to be caught up in disputes between already existing large, interconnected healthcare systems and insurance providers.  Working families will continue to experience the stress and anxiety of having to figure out what to do when they can no longer see their doctor or afford to do so.  At least in the near term, efforts to break up corporate giants or increase competition in the marketplace are unlikely to address the immediate needs of patients to receive lifesaving care from their doctors at a cost that does not force them further into debt or risk bankruptcy.  Working families need solutions today – they cannot afford to wait for new firms to enter the marketplace.  

I suggest that an immediate, workable solution to disputes between large healthcare systems and insurance providers can be found in federal labor law.  The early days of the Industrial Revolution were marked with widespread strikes and uneasy relations between emerging labor unions and large corporate giants run by titans such as John D. Rockefeller, Andrew Carnegie, and George Pullman – to name a few.  In fact, the United States is infamous for having some of the bloodiest and most violent labor strikes of any industrial nation in the world.  The National Labor Relations Act (“NLRA”) was born out of this period of strife with the sole purpose of providing industrial peace to keep the United States at full economic production which was essential to the new economy.  

One of the hallmarks of the NLRA, also known as the Wagner Act, is the requirement that employers and labor unions bargain in good faith with one another.  Failure to bargain in good faith is an unfair labor practice.  The Act also sets out procedural guidelines on good faith bargaining including that notice be provided to the Federal Mediation and Conciliation Service, a government agency, and that the agency makes best efforts to bring both parties to the table to come to an agreement.  The parties are required to participate “fully and promptly in such meetings.”  However, the agency has no authority to set contract terms between the parties.  Rather, it is merely a conduit through which employers and labor unions can attempt to resolve their disputes before an impartial third-party.  

I believe that a similar solution could be used to bring large healthcare systems and insurance companies to the table to bargain in good faith before a neutral arbitrator.  However, unlike federal labor law, I believe that if the parties cannot come to an agreement, the best solution for the public is for the arbitrator settle the dispute.  Given the considerable economic arguments involved, and the potential for such a determination to impact the safety and soundness (i.e., the solvency) of insurance companies, perhaps the best body to resolve these disputes is the State Corporation Commission – Virginia’s insurance regulator.  Perhaps, the risk of having a neutral arbitrator settle the dispute may even create incentives for the companies to come to the table and bargain more eagerly.  

I recognize that this solution is a far cry from the traditional free market principles of letting companies sort out disputes on their own and, in most other industries, this is likely too heavy-handed of an approach.  However, a battle between two monopolies – or a monopoly and an oligopoly – is a far cry from the give and take of the free market envisioned by Adam Smith in the Wealth of Nations.  Moreover, there is a tremendous social cost to be born by the public in letting these companies sort it out by themselves: the sleepless nights of parents worrying about whether they can afford medical care for their children, patients who must decide between putting medical debt on the credit card or forgoing care, and, overall, a less healthy public.  What we need is medical peace, like industrial peace, to keep us all going.  

The theory of a free market says consumers will vote with their feet.  But, in this case, we don't have a free market, and healthcare is far too important to wait for one.  We need an arbiter.

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EDITORIAL: Cruel. Petty. Vindictive.

by Martin Davis - F2S Founder and Editor

Just when you think it can’t get any worse in Spotsylvania, it does.

At Monday night’s school board meeting there’s a proposal to change the way schools receive prepackaged foods - i.e., snacks. From the school board agenda:

Any donations of prepackaged food weighing one pound or more in total will only be accepted at the Spotsylvania County Fleet Services Building for inspection on the first business day of each month. Inspections will include a search for package tampering, expiration dates, and possible allergens by the Director of Health Services or the Director of Health Services’ designee. The School Board will approve the prepackaged food donations at their next regular meeting. Once approved by the School Board, the donated prepackaged food will be delivered to the designated school by division personnel in the usual manner of any delivered package. Out of abundance of caution for school safety, schools are prohibited from directly accepting prepackaged food donations of one pound or more in total until the donations have gone through the safety inspection and approval process outlined in this policy. This policy does not preempt the language in JFCF-R1. Furthermore this policy does not preempt existing prepackaged food donation arrangements between school social workers and non-profit organizations.

Framing this as a safety issue doesn’t pass the smell test.

Following a blowup over citizens and minority board members providing snacks to kids who need them, Chair Lisa Phelps and her fellow members in the majority turned an act of compassion into yet another opportunity to score political points with the extremist Tea Party members and the limited number of loud, vocal parents whose goals have everything to do with advancing a right-wing political agenda and little if anything to do with education.

This action is just cruel. Vindictive. And utterly unnecessary.

It would end parents bringing birthday cakes to schools. And churches like Spotswood Baptist, who have for years have brought supplies - including food - to students at Spotswood Elementary from so acting in a timely way. And businesses like Paragon Gymnastics, which gives hundreds of dollars every month since the fall to Salem Elementary School, from continuing this practice in a timely way.

Protesting to Phelps, Kirk Twigg, and April Gillespie will do no good. They’ve already shown their unwillingness to have a reasonable debate with anyone they disagree with. Their goal is to micromanage this school system and run it with an iron fist, cramming an extreme right-wing agenda down the throats of employees, students, and parents.

The question becomes, will Rabih Abuismail, who in an interview with me late last year bemoaned how “political” everything has become, finally recognize the political motivations behind this move and do what is right for the children of this county?

A self-professed Christian, will he really support an action that will undermine the ability of faith organizations to do what they have long done? Support our community schools?

Abuismail has made it clear to me that he “will not be seeking re-election.” He’s also made it clear that his willingness to take steps to make this board work are severely limited. Asked if this board were to go on a retreat to work out their problems would he attend, he said: “I will not join … because I truly feel that will not remedy what’s going on.”

If he has no election left to run. If he believes in the importance of churches helping in the community. And if he really believes that politics are out of control.

Let him take a stand - finally - and do the right thing by striking a blow against blatant political grandstanding.

If he can’t, then this should be his last board meeting. Do this district a favor and resign.

The board would be split 3 to 3 for at least a while, and nothing would get done. That would be a significant improvement over the chaos and cruelty this board is unleashing.

Reader Poll

Last week we responded to reader who objected to our calling Foode the area’s best restaurant. So you we asked you what the best restaurant is. It was a tight race. Here are the final results:

1. Orofino - 25%

2. Foode - 22%

3. Other - 21%

4. La Petite - 19%

5. Cork and Table - 12%

The results beg a question - What other restaurants do you like? Our survey tool is limited, and we can’t provide a place for you to fill in your answers. So we’re going to ask you to tell us. If you favor a restaurant not on this list, tell us by sending your favorite dining spot to editoratf2s@gmail.com. We’ll announce the other nominees next Friday.

This week’s poll focuses on the issues you’re most concerned about in the upcoming November election.

Is your top concern not on the list? Email your entry to editoratf2s@gmail.com.

Publication Schedule

At this time, F2S guarantees publication every Monday and Thursday. However, thanks to the overwhelming response this publication has received, I will be trying to publish at least one piece every day, except Saturday and Sunday.

Help me find the stories that people want to read by submitting a News Tip.

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