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A big insurer backed off its plan to pay less for anesthesia. That’s bad.
What the fight between Anthem and anesthesiologists was really about.
Eric Levitz is a senior correspondent at Vox. He covers a wide range of political and policy issues with a special focus on questions that internally divide the American left and right. Before coming to Vox in 2024, he wrote a column on politics and economics for New York Magazine.
In November, the American Society of Anesthesiologists (ASA) issued a dire warning: One of America’s largest insurance companies — Anthem Blue Cross and Blue Shield — had just “unilaterally declared it will no longer pay for anesthesia care if the surgery or procedure goes beyond an arbitrary time limit, regardless of how long the surgical procedure takes.” The decision applied to Anthem’s plans in Connecticut, New York, and Missouri.
This announcement gained national attention Wednesday, after the fatal shooting of UnitedHealthcare CEO Brian Thompson sparked widespread discussion of controversial insurance industry practices on social media. A populist furor against Anthem ensued. People imagined patients waking up from surgery to find they owed thousands of dollars because their procedure went 15 minutes long.
Rage at the insurer spread from X users to government officials, with Connecticut Sen. Chris Murphy and New York Gov. Kathy Hochul both condemning the insurer’s decision, with the former posting, “This is appalling. Saddling patients with thousands of dollars in surprise additional medical debt. And for what? Just to boost corporate profits?” By Thursday, Anthem had revoked the policy.
Yet this whole tumult was badly misguided.
Americans have many justified grievances with insurance companies, which often refuse to cover necessary care.
But this particular fight was not actually about putting the interests of patients against those of rapacious corporations. Anthem’s policy would not have increased costs for their enrollees. Rather, it would have reduced payments for some of the most overpaid physicians in America. And when millionaire doctors beat back cost controls — as they have here — patients pay the price through higher premiums.
Anthem’s policy would have cost anesthesiologists, not their enrollees
Anesthesia services are billed partially on the basis of how long a procedure takes. This creates an incentive for anesthesiologists to err on the side of exaggerating how long their services were required during an operation. And a few studies have found that a small portion of anesthesiologists may engage in overbilling by overstating the length of a procedure, or the degree of risk a patient faces in undergoing anesthesia.
Starting in February, Anthem had planned to discourage overbilling by adopting a set of maximum time limits for procedures, inspired by data from the Centers for Medicare and Medicaid Services. If an operation went long for medically necessary reasons, anesthesiologists could appeal for higher payment. But the process of reimbursement would be more arduous.
Critically, contrary to Murphy’s claims, this policy would not have saddled patients with surprise bills, if their operations went over time. The burden of this cost control would have fallen on participating anesthesiologists, not patients, according to Christopher Garmon, associate professor of health administration at the University of Missouri-Kansas City’s Henry W. Bloch School of Management.
“Say there is a contract between an insurance company like Anthem and an anesthesiologist,” Garmon told Vox. “What is always in that contract is a clause that says, ‘You, the provider, agree to accept the reimbursement rules in this contract as payment in full.’ That means the provider cannot then turn around and ask [the patient] for money.”
Providers – not insurance companies – are the primary drivers of high health care costs
Private insurance companies have earned the public’s distrust. They routinely put profitability above their policyholders’ well-being. And a system of private health insurance provision also has higher administrative costs than a single-payer system, in which the government is the sole insurer.
But the avarice and inefficiencies of private insurers are not the sole — or even primary — reasons why vital medical services are often unaffordable and inaccessible in the United States. The bigger issue is that America’s health care providers — hospitals, physicians, and drug companies — charge much higher rates than their peers in other wealthy nations.
In 2021, the US spent nearly twice as much per capita on health care than other developed countries. According to the Kaiser Family Foundation, this gap is mostly explained by higher payments to hospitals and physicians. Americans spend $7,500 per person on inpatient and outpatient care, while other rich nations spend an average of $2,969 per person. This is not because Americans are receiving more medical care than their peers abroad; on the contrary, we make fewer doctors’ visits per capita and have shorter average hospital stays. We just pay much higher prices.
In 2023, the average physician salary in the United States was $352,000. In Germany, that figure was $160,000; in the United Kingdom, it was $122,000; in France, it was $93,000.
This discrepancy is partly explained by the fact that those European nations have more socialized health care systems, in which the government imposes more cost controls on medical providers. In the past, progressives have emphasized that a Medicare-for-all system would reduce overall health care costs by forcing providers to accept lower payments.
With its new policy, Anthem was attempting to do precisely this: force anesthesiologists to accept lower rates of reimbursement.
And the case for forcing down payment rates for anesthesiologists is especially strong. According to Medscape’s 2024 Anesthesiologist Salary Report, the average salary for an American anesthesiologist in 2023 was $472,000. This represented a $70,000 increase over the field’s average salary in 2022. This puts anesthesiology in the top 10 highest-paid physician specialties in the United States.
If we want America’s health care system to treat more patients — while charging us all less money for coverage — then there is no alternative to forcing myriad specialists to accept lower payment rates. Ideally, we would do this through a comprehensive system of public cost controls and insurance provision. Failing that, we need private insurers to drive a harder bargain with the most expensive doctors and hospitals. When we demonize insurers for doing precisely that, we aren’t standing up against our health care sector’s profiteers — we’re sticking up for them.
Correction, December 13, 7 pm ET: An earlier version of this story misstated where anesthesiologists rank against other specialists in terms of salary. They are actually the eighth highest-earning specialists.
Clarification, December 13, 7 pm ET: The story has been updated to clarify that the studies on overbilling suggest it may be happening in a small percentage of cases.
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