Health Care Must Serve Patients, Not Corporations

Such monopolies also allow companies to continue offering consumers poor products. Health care is frequently a consumer hassle, involving long wait times, inefficient and archaic consumer interactions, and often deliberate barriers to care. Receiving health care is never likely to be something people look forward to — but it should not be the ordeal of denied care and unfair practices it has too often become in America. To make sure health care serves patients, not corporations, we propose the following reforms that will also lower costs:

1. Ending the power of insurance monopolies to stack the deck against patients
2. Preventing corporate hospital systems from using monopoly power to drive up costs for patients
3. Unleashing the creative power of American innovation to make health care more responsive and consumer-friendly

A charter of consumer rights to make sure insurance companies treat patients fairly

Insurance should be a conduit to good health care, not a barrier, but insurance companies often place barriers between patients and the care they need by using denials of coverage systematically as a way to boost profits, particularly for low-income beneficiaries who are less likely to appeal — a practice that one expert has called “rationing by inconvenience.” The ever-expanding use of AI threatens to automate these denials to robot efficiency and scale.

Insurance companies should obey a charter of consumer rights, including time limits and transparency on prior authorization decisions, an automatic “passport to approval” for providers who achieve a high level of successful preauthorization, and automatic approvals for routine care and limits on administrative expenses. Companies should face meaningful penalties when they fail to live up to their responsibilities. Building on the model of the ACA, companies that fail to fulfill their charter obligations would face civil monetary penalties, and could ultimately be barred from participation in public programs for repeated or egregious infractions. Participation in public programs is a privilege for insurance companies, not a right.

That privilege should be rescinded for companies that consistently fail to serve the public interest.

Cutting the cost of “middlemen”

Health care is replete with contractors and specialists who each take a cut of the patient’s dollar. From Pharmacy Benefit Managers to Revenue Cycle Managers to Claims Re-Pricers, there is an army of specialists who intervene between patients and payment. These middlemen are meant to reduce costs by driving efficiency — but often do just the opposite. When third-party administrators are owned by the same companies that contract for their services, they have every incentive to raise costs, rather than lowering them. The Federal Trade Commission and other agencies should enforce existing antitrust and competitive statutes — adding to them where needed — to ensure that financial arrangements between insurers, hospitals, and third-party administrators that fail to serve the needs of patients are eliminated.

Reining in the power of health care monopolies

Companies in health care have a responsibility to put patients’ needs above profits. Too often, they do the reverse. To protect the rights of consumers, other countries apply broader community benefit criteria in their anti-monopoly laws, and the United States should adopt the same standards in health care. We need to give the government new and more powerful tools to investigate whether health care monopolies serve patients, and to take action if they do not.

We would give the Federal Trade Commission the authority to investigate insurance conglomerates and dominant hospital systems using broader standards of community benefit. If the community’s interests are not served, the FTC would have the power to require changes or force structural change. Companies that serve patients should put the interest of patients first — and if they fail to do so, they must change or be changed.

Insurance conglomerates

Vertically integrated insurance conglomerates have engaged in unfair business practices such as spread pricing, rebate retention, preferential in-house pricing, and gag clauses, all of which drive up costs and reduce choice. We would address these and related abuses in two ways. First, there would be an immediate ban on such practices. Second, the FTC would be given new legal authority to investigate whether insurance conglomerates violate these and related standards. Companies would face fines and other disciplinary action if they fail to respond to such investigations. Where the FTC determines that a conglomerate is harming patient interests, that finding creates a rebuttable presumption of violation — meaning the FTC could begin antitrust enforcement action. The company would then have 180 days to show why its actions are not violative. If they fail to do so, there would then be a 90-day window for the system to reach an agreement with the FTC on measures to resolve the violation. If such an agreement is not reached, the system would be referred to the Department of Justice for enforcement measures that could include required divestment. State attorneys general would also be given authority to take action in cases of violation using the same parens patriae structure that applies to other antitrust violations.

To ensure that beneficiaries in Medicare see the benefit of these reforms, the Centers for Medicare and Medicaid Services would be authorized to enforce compliance with these standards through its range of enforcement options, including banning companies that violate the standards from participating in these programs. Finally, all insurance companies would be subject to these standards, to ensure that consumers receive the maximum cost reduction.

Corporate hospital systems

Hospitals, doctors, and nurses are the backbone of health care, but big hospital systems often behave as big corporations in all but name, dominating local markets. The health care markets in roughly half of all major communities in the United States are controlled by only one or two health systems — and a fifth are controlled by just one. Hospitals with monopolies charge consumers more for services than hospitals in competitive markets.

As with insurance companies, we would give the FTC new powers to enforce community benefit standards on hospital monopolies, and take action if they are not followed. Where the FTC determines that a dominant hospital system charges prices that significantly and unjustifiably exceed comparable prices in comparable communities, that finding creates a rebuttable presumption of violation. This finding would trigger the same response and action process system described for insurance companies above. If hospital systems fail to justify their prices, the federal government and state attorneys general would be empowered to take action, which could include required divestment. State Certificates of Public Advantage would not be allowed to block federal enforcement of these violations.

The same price for the same service

Empowering the FTC with new resources and legal authorities is one tool to make sure hospital monopolies serve community interests. Reimbursement is another. To prevent hospital monopolies from using their market power to drive up costs, we should institute site-neutral payments for outpatient services to prevent unjustified surcharges that help big hospital systems inflate prices.

Ending abusive billing and collection practices

In return for receiving lucrative exemptions from taxation, nonprofit hospitals are meant to serve their communities, but many fail to do so. To ensure that hospitals live up to their responsibilities, there should be a 2% across-the-board requirement for nonprofit hospitals to provide charity care. Failure to do so would result in potential loss of nonprofit status.

We should also put an end to the predatory practices sometimes used to collect medical debt. Hospital systems sometimes market credit cards and payment plans with interest rates that would make a loan shark blush, or resort to wage garnishing and bank seizures to collect debts. These practices should be ended through strict enforcement of consumer protection laws, with penalties including the denial of system eligibility for Medicaid and Medicare reimbursements.

To improve health care quality, federal programs should use their market power to drive reforms such as maximum wait time standards and team-based care. Federal programs should also dismantle barriers to telemedicine and electronic communications to help make care more responsive, efficient, and cheaper.

Preventing private equity from looting hospitals and denying care

Across the country, private equity (PE) firms have devoured hospitals and medical practices, stripped the flesh from the bones, and left communities with only the carcass. In no other economically developed country is this behavior tolerated — and it should not be tolerated in America. To end these abuses, we should:

1. Establish a new, lower threshold for prior federal review of PE acquisitions in health care to determine whether they will have a harmful impact on the quality and availability of health care in a community;
2. Ensure ongoing compliance by creating a revocable license for engaging in PE transactions in health care, as is currently done with broker-dealer licenses; and
3. Require strong guardrails to prevent PE firms from improperly influencing medical decisions — enforced as a Condition of Participation in Medicare and through the civil and criminal penalties of the False Claims Act for PE firms.

X-Prize for responsive health care

X-Prizes have been used by innovative organizations to catalyze the development of new and important technology in sectors from aviation to nanotechnology to climate change. We will throw down the gauntlet to American innovators with an X-Prize for new consumer-friendly technologies that improve access and patient satisfaction while reducing costs.