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Posted on 01/22/2026 5:34:22 AM PST by DFG
Surprise medical bills have bludgeoned most Americans. In fact, about half of insured Americans face unexpected charges every year. In 2020, Congress passed the No Surprises Act, which banned out-of-network billing rates for some services. It also entitled patients who aren’t using health insurance to a “good faith estimate” of out-of-pocket costs before receiving care. But there’s a catch that stacks the deck against patients and taxpayers: final bills within $400 of the original estimate are legally collectible.
After stinging GOP losses in November, health care “affordability” is all the rage. Voters are frustrated that every other medical appointment brings another unexpected charge and an inevitable battle of wills and wits with the billing department. Christopher Jacobs recently opined in these pages that “Republicans should stop playing into Democrats’ hands and start … reducing the underlying cost of health care.” In that spirit, President Donald Trump should ensure that hospitals do not profit from “errors” with executive action.
In February, Trump issued an executive order building on a first-term order that required hospitals to post public prices for common, standardized procedures like CTs, MRIs, mammograms, etc. If hospitals must post prices rather than bill insurers and patients later, patients will price-shop and save money for themselves and their insurers (which, if they are on Medicare and Medicaid, is you, the taxpayer!). But the $400 wiggle room embedded in the No Surprises Act eliminates much of the intended benefit.
Imagine that two competing hospitals offer CTs. Hospital A knows its real cost to provide a CT is $400. Hospital B knows its real cost is $300. If both post prices and provide estimates that reflect real charges, Hospital B will have an advantage. But with a $400 allowed error, why wouldn’t Hospital A estimate its CT at $150 to undercut Hospital B, knowing the patient will pay more than double that in the end? Hospital A can attract more patients without any cost to itself. If the patient goes to Hospital A, he pays $400 instead of Hospital B’s $300, and his insurance company probably loses more. Hospital A wins and everyone else loses.
The financial incentives encourage all hospitals to consistently provide underestimates. While fraudulently botching an estimate is illegal, it would probably take a whistleblower to prove an estimate was not in “good faith,” since it would require proving “intent.” Potentially defrauded patients have no access to other patients’ records to ascertain whether a pattern exists. Current law shelters deceptive, anti-competitive behavior.
Of course, error by itself is not a sign of purposeful deception. But consistent errors in the same direction — errors that do not roughly average to zero over time — suggest the estimator is missing on purpose. In my industry (banking), we don’t fire a teller who’s off $10 on his daily count. A teller could have many small errors over the course of a year, but if his errors roughly average to zero, it’s almost certainly inadvertent. But if the teller’s drawer is consistently wrong in his favor, he is fired. Applying the same concept to health care estimates is straightforward and imposes minimal regulatory burden while protecting patients.
Hospitals should be required to record every estimate they give in a single document (probably a spreadsheet), along with the actual amount billed, and subtract the two to obtain an error amount.
For example: you get an estimate of $200 for a procedure and pay $275. The error is $75. The hospital tracks this for every patient, and provides the spreadsheet tracking their aggregate error to the Department of Health and Human Services at the end of the fiscal year. However much the hospital billed more than estimated amounts is then repaid to patients who were charged more than estimated amount (or taken off their bill if they have not yet paid), in proportion to their overpayments. The smaller the hospital’s overall error rate, the smaller the refunds owed.
This system would not punish honest errors. The average of honest errors is zero over time. If the hospital’s overestimates and underestimates cancel each other out, it doesn’t owe anything back to anyone. But if there is an aggregate error, it is refunded to the harmed patients. A hospital’s incentive to low-ball people to get them in the door is replaced by a powerful incentive to provide the most reliable estimates possible. This new rule could reduce overall administrative burden, lessening the need for time-consuming arbitration over individual estimate discrepancies.
This market-based approach does not require proving intent to deceive. A hospital that is bad at estimation but not doing it on purpose would be punished not for willful violation, but for incompetence and inefficiency. The burden of proof is taken off of individual patients to prove wrongdoing in this scheme. Such a rule, especially if framed as an executive order to buttress the price transparency action already taken in February, would prove much harder to challenge or evade than statutes requiring proof of intent.
President Trump is on the right track with pursuing greater price transparency in health care. His administration must continue to help lower health care costs and end the recurring nightmare of unexpected medical bills. American taxpayers now spend nearly $1 trillion on Medicare, and health care gobbles up 18 percent of GDP. Reducing inefficiencies is a national imperative, not a wonky side project — and eliminating hospitals’ incentive to provide incorrect estimates is a necessary part of this reform.
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Click here: to donate by Credit Card Or here: to donate by PayPal Or by mail to: Free Republic, LLC - PO Box 9771 - Fresno, CA 93794 Thank you very much and God bless you. |
Interesting. Thanks for posting.
” The financial incentives encourage all hospitals to consistently provide underestimates. “
It helps the insurance company the most.
For health care, bring on market force:
1. Break most hospitals into two highly competitive entities
2. Convert other hospitals into real estate leasing entities with competing surgical suites and nursing wings
3. Separate out drug coverage so hospital systems can run care coverage systems and cut out insurance company overhead and meddlers.
4. Create interstate drug plans that don’t have to pay want the drugmaker wants for every drug. To qualify for exchange listing and federal subsidies, they would have to most (~80% or more) in all important types (large volume recombinant, small volume recombinant, breakthroughs under patent, etc.). Group and exchange plans to offer time-limited vouchers at plan set amounts for out-of-formulary drugs. Voucher plans would have variable premiums. Plans without minimums (or vouchers) could be vended directly to individuals and families.
5. These plans would be all the doctors (and AI) prescribe for formulary drugs with co-pays equal to manufacturing cost
6. reform medical education, breaking down medicine and dentistry into simpler chunks and start it in the first year of college
7. replace most primary care doctoring with AI
(Insurers would pay human doctors to confirm AI diagnosis, orders for expensive tests[MRI, genetic], prescribe radiation imaging[CT, PET, X-ray]/treatment, and voucher/government co-pay drugs. Other human doctor care would be private pay.)
8. Radioisotope-related care would be at international airport centers
One thing that I have noticed (at least I think that I have noticed) is the difference you are charged if you have insurance vs. not having insurance. You are charged less if you have insurance, possibly because the insurance companies have agreements with some medical facilities for “allowed” charges. Individuals do not have that kind of arrangement or power. Therefore, it is good to have medical insurance, not only because the insurance pays most of the bill, but also because the bill itself starts out at often less than half the price.
“Break most hospitals into two highly competitive entities...Separate out drug coverage so hospital systems can run care coverage systems”
You would pay lower premiums (insurer overhead only for drug coverage).
Your co-pay would be in your hospital plan coverage document.
Medicare multiple pricing could be required by state law, with changes only allowed quarterly.
Providers might be required to post their multiples on every door used by hospital customers.
Hospital websites might be required to list the hospital’s multiplier plus the multipliers of providers on duty with multipliers different than that of the hospital.
Our Multipliers
BIG CITY HOSPITAL 1.3
Dr. Knife 1.6
Dr. Messer 1.5
Dr. Nosh 1.5
Dr. Gas 1.4
Dr. Mask 1.5
Dr. Painless 1.6
Dr. X 1.7
Dr. Film 1.6
Dr. Scanman 1.5
Dr. Testtube 1.6
Dr. Microscope 1.4
Nurse Dracula 1.5
That is a great idea to simplify comparison shopping. Congress should definitely go with that approach.
The article has a good solution for sneaky underestimates.
Yet and illegal can come across the border and receive all kinds of medical care courtesy of the American tax payer.
Credit Card (USD) - $210.00
Private Insurance - $250.00
Government Insurance - $300.00
Keep in mind that Drs fees are not so regulated. Here in CaCaLand hospitals are rigorously regulated. But, if a Dr offers his services outside the hospital, perhaps at a clinic he owns, he can skip some of the regs.
Mind, this does not necessarily mean this practice is an attempt to gouge you. Moving services out of a hospital can drop prices on occasion.
Like an MRI with a "list" price of $8,000. If you pay cash, you might get a "discount" to $6,000.
The price if you have insurance: $450. What the hospital gets paid: $300.
A real-life example from personal experience.
"Health Insurance" is an extortion racket. Hospitals are partners with the Insurance companies in the racket.
I was working at a hospital when the rules came out years ago. Each hospital had to post the costs for all procedures.
It was impossible to make this come out “intelligible.” Of course, we could publish “the cost for a standard vaginal delivery without complications.” We did seven or eight of those a week.
But posting the cost of a Whipple Surgery? An emergency C-Section? A Gall Bladder removal? A hip replacement?
The variables on those procedures made it impossible to post.
And if you posted a general cost…we couldn’t guarantee that we would “hit it.”
What I learned was that every procedure is different. Every item used on that procedure is logged—and billed. If you needed more sutures? That cost more. If you bleed more? That cost more. If your blood pressure dropped during surgery…that cost more.
People seem to think that a hip replacement for me is going to be the same as it is for you.
And it seems…everyone comes looking for a fight.
So what we did is post a list of the medical billing codes and their per unit costs. Unless you had taken a six month course in medical billing, it might as well have been posted in binary code.
And a $400 range? Very little needs to happen to make a $400 difference when you are in an operating room.
You can blame Medicare, Medicaid, and the insurance companies for the mess we are in. We never should have included health care insurance with employment back in the 1940’s. But, they couldn’t raise wages…so they added benefits.
In order for this to change….it is going to have to be a HUGE change. I don’t think many people are actually ready for that.
Most of the time, if you are paying cash, you will get the Medicare agreed upon reimbursement for that rate. If you say nothing…you will get billed “retail.” No one should pay “retail.”
Ask Joan Rivers about “surgical suites.”
Don’t ever, ever go under general anesthesia outside of a hospital environment. Your life isn’t worth the cost savings.
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