AWP Could Make Care Competitive (Editorial)

The opposition to the Patient Protection Act — in 1995 as now — makes a persuasive argument that emasculating the primary tool of managed care will lead to higher costs. After all, managed care is to health care providers as Wal-Mart is to houseware manufacturers — demanding lower prices in exchange for a guarantee of higher sales volume.

No wonder so many businesses, not to mention the Arkansas State Chamber of Commerce, have registered their opposition to proposed legislation best known as “any willing provider.” It may sound nice to require insurers (and self-insured businesses) to cover treatment by any provider willing to accept the same payment as the contracted providers, but won’t it actually dilute the volume that led those contract providers to sign up in the first place?

This argument assumes that managed care really is working to keep the price of health care down to the lowest possible level — just like Wal-Mart effectively forces its vendors to squeeze all the fat out of their manufacturing processes. And there is strong reason to believe that isn’t happening, at least not in Arkansas.

Arkansas Blue Cross and Blue Shield is managed care in this state, controlling some 80 percent of the premiums paid in Arkansas in 2003 and acting as third-party administrator for much of the self-insured market. (It is also one of the only businesses we deal with that actively understates its market share in order to appear less dominant than it is.)

ABCBS hasn’t taken general bids for hospital services since 1993, when it went into a partnership with Baptist Health on the Health Advantage HMO — an alliance that immediately spilled over into non-HMO products and which the Arkansas Medical Society has referred to as a “cartel.”

Even an offer from St. Vincent Health System to accept 10 percent less than Baptist’s contracted fees couldn’t get a nibble out of ABCBS. To our knowledge, ABCBS didn’t even demand that Baptist match that offer in order to keep its contract.

We probably don’t have to point this out, but that’s not the Wal-Mart way.

“Any willing provider” is radical legislation that shouldn’t be a good idea and may not be a good idea elsewhere.

But a virtual monopoly isn’t good for prices, either, and AWP could be just what the doctor ordered to get more competition in this state’s health care marketplace.