🔒Lawmakers must respond ‘carefully’ to insurer-hospital contract disputes

The phrase “consumer protection” isn't always thought of as a double entendre, but in the political and business worlds it often carries a double meaning.

To some, particularly those on the political left, consumer protections are necessary safeguards that prevent individuals who purchase a product or service from being harmed or taken advantage of. To others, typically conservatives, consumer protections are often seen as government regulations that make it more costly to do business.

The power struggle over the Obama-era Consumer Financial Protection Bureau, in which President Trump appointed his ultra conservative budget director Mick Mulvaney — who previously called the CFPB a “sick, sad joke” — to wrestle away control of the agency from acting director Leandra English, underscores the divergent world views of some consumer safeguards.

The debate over government's role in instituting consumer protections will likely come into sharp focus next year in Connecticut, as lawmakers respond to the recent contract dispute between health insurer Anthem and Hartford HealthCare, which left tens of thousands of patients temporarily paying higher costs for medical care as the two sides were unable to come to an agreement nearly seven weeks after their old deal expired.

Lawmakers rightfully held a public hearing on the topic last week, soliciting feedback from both organizations' executives as well as consumer advocates and the state's insurance commissioner, to try to determine how best to respond to the issue.

Legislators will need to tread carefully as there are no easy answers. It's clear that some new consumer protections must be adopted to prevent health insurance customers from losing access to care providers in the middle of their policy contracts, or at least give them more time to seek alternative care when such contract disputes arise. But an overreaction by the legislature could also increase the costs of health care in a state already burdened with some of the nation's highest medical expenses.

This is not a new issue in Connecticut. Democrats for years have tried to respond to the increasingly acrimonious contract negotiations between insurers and care providers, which have resulted from various factors including pressures to restrain healthcare costs, changing payment models and industry consolidation that has significantly diminished competition and, at least in some cases, led to higher prices.

Senate Majority Leader Martin Looney (D-New Haven), for example, previously proposed legislation that would have required insurers and hospital systems to go to mediation and/or binding arbitration when they can't reach an agreement. He's promised to revive that legislation next year.

Another potential remedy is requiring individual hospitals within a healthcare network to negotiate contracts with insurers rather than allowing system-wide contracts, thus reducing the bargaining power of large hospital systems.

For now, those steps seem to be an overreaction because there is no clear evidence to show how such government interventions would impact the costs of health care. Do we really want a judge or some other independent arbiter determining how to price medical services in the state?

Health insurers often get a bad rap, but they have an incentive to negotiate lower reimbursement rates with hospitals and other care providers, which ultimately helps control the costs of health care. Diminishing their negotiating power could have negative affects.

This political debate must not simply be seen through a consumer-protection lens. There are larger forces at play that could impact access to and the costs of health care as well as care quality.

One common-sense measure is to require insurers and care providers to abide by a “cooling-off” period if they can't come to a contract agreement. A 2015 proposal, for example, would have required both sides to abide by a terminated contract for at least 60 days, before patients are forced to pay out-of-network costs for services. New York and New Jersey have a similar requirement.

Giving patients, especially those with chronic conditions, more time to find alternative treatment arrangements seems like a fair first step.

Beyond that, lawmakers need more data and analysis before government intervenes in negotiations between private parties.