In the Texas Community

Blue Promise: Is Price Gouging Legal?

Seeking medical care during emergencies shouldn’t put people at risk for bankruptcy. However, Texans are continuously charged exorbitant prices in the midst of their most vulnerable moments – during an emergency medical situation. In this Blue Promise conversation, Dr. Paul Hain, Chief Medical Officer at Blue Cross and Blue Shield of Texas, discusses the growing reality of price gouging in health care. You can also listen to this discussion in podcast form on Apple Podcasts and SoundCloud

Blue Promise is a podcast and online video blog that aims to address complicated health issues with candid conversations from subject matter experts. New editions are published regularly and are hosted by Dr. Dan McCoy, President of Blue Cross and Blue Shield of Texas, and his co-host, Ross Blackstone, Director of Strategic Influence. 

Show Transcript

DAN: Seeking medical care during emergencies shouldn't put people at risk for bankruptcy. However, Texans are continuously charged exorbitant prices in the midst of their most vulnerable moments during an emergency situation.

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DAN: Thanks for joining us for this episode of Blue Promise as we discuss the growing reality of price gouging and health care. I'm Dr. Dan McCoy and I'm the President of Blue Cross and Blue Shield of Texas and I'm here with my co-host Ross Blackstone.

ROSS: Thanks Dr. McCoy, we have Dr. Paul Hain here with us, he's the Chief Medical Officer for Blue Cross and Blue Shield of Texas. So, Dr. Hain, Dr. McCoy use the term price gouging.

PAUL: He did.

ROSS: It's something that we, you know, we hear, every once in a while, in the news and it can be relevant in healthcare but before we get into the details of how it relates to health care maybe if you could just define for us what is price gouging?

PAUL: Sure.

Ross, you know just in general price gouging is when you're in a natural disaster, a declared emergency zone and folks start charging exorbitant amounts of money for the basic necessities like fuel, water, that sort of thing. Much like you know, recently we had a hurricane here in Texas and if you had a convenience store there and you decided you know a case of bottled water suddenly cost 100 hundred dollars just because everybody needs it, that would be price gouging.

DAN: So, it sounds like a little bit that if you are vulnerable and have little control of your circumstances then you're at risk for price gouging.

PAUL: Right, it’s essentially a way for our society to say look we're a free market society and we like the market set the price. But in a case where there is no market because there's an emergency and you don't really have a choice you don’t have time to think and you really need what you need. There has to be some limits as to what people can charge just to make it a fair way to live.

ROSS: You gave the example of Hurricane Harvey, water, gasoline as another example, Dr. McCoy. There was one gas station in Houston that charged 20 dollars for a gallon of gasoline during Hurricane Harvey whereas the week before it was two dollars and 12 cents.

PAUL: Right. And that's the thing is that it's just pure profiteering, right. It's not like it cost them suddenly 20 dollars to get the gas in the gas station, right. Just because you can take advantage of somebody, you decide to.

DAN: So, it sounds like in Texas though we have pretty strict rules related to price gouging. So that gas station in Houston has the risk that the attorney general could step in and do an investigation. But what happens if you were injured in Hurricane Harvey and ended up in say an emergency room or say you just ended up in an emergency room.

PAUL: Right, I mean that's such a good example because when you're having an emergency and you go to an emergency room that is your own localized emergency.

DAN: So, you're vulnerable.

PAUL: You're vulnerable, you need to react quickly, you can't stop and shop around and ask what the price is while you're having a heart attack. So, then the question becomes is it okay for an emergency room to gouge you in that situation. 

DAN: So, you have no protections really.

PAUL: You have no protections. They can set their price at literally anything. And when you're done tell you to pay it.

DAN: Okay, so, I always have the ability to beat a good analogy to death.

PAUL: Let's give it a try.

DAN: Okay, so, but at least in that gas station you probably would know when you got the gas that it was 20 dollars. But the other problem you run into with the emergency room is you really don't know what the prices are at all.

PAUL: Right, if we wanted to beat it to death you would fill up your car and go home and two months later you'd get a bill for four hundred dollars for your tank of gas and then be expected to pay it.

DAN: So, what happens in the emergency room I guess is that you're vulnerable, you're captive because you may be forced to go there because there's no really where else to go. And yet you may have things done to you that you have no idea what they cost or whether or not they're going to be bankrupting your family.

PAUL: That's right and really even there comes to the cause of mutual consent, right. Which is really the heart of our ability to execute contracts and this gets a little wonky, but if you can't mutually consent to a price then there was actually no contract there. So, it also begs the question are these folks sending out egregious bills that don't make any sense according to how we actually execute contracts in United States so it becomes really important to specifically give the attorney general the right to go inquire about these things because you can't expect folks to be able to make a decision there they're vulnerable and they need help right then.

DAN: Is this a crisis right now?

PAUL: Oh my gosh yes especially in Texas. You know we have so many freestanding E.R. is in Texas about more than 200 more than half of the freestanding ER’s in the country, so people are getting care at these places in their vulnerable situations and then they're getting gouged. Like if you look at these charges from the freestanding E.R. It's just stunning how high they go.

DAN: Give me an example of price gouging for an emergency, let's say for instance that my kid is sick and has a fever and you know I don't really know what's wrong with him and pediatrician is not available, and I walk into an emergency room what's the price gouge look like?

PAUL: So let like let's say that your child turned out to have an ear infection right. Had you gone to an urgent care center where one might say that's kind of the market price that would be like 180, 200 dollars if you go into a freestanding ER it could easily be north of 3000.

DAN: But I guess what you're saying is it's not that there's a problem with them walking into the freestanding emergency room. This is a problem that you can't gouge somebody three thousand dollars for a simple ear infection.

PAUL: Really you shouldn't be able to, it just doesn't make any sense.

ROSS: So, you mentioned freestanding emergency rooms. The Dallas Morning News editorial board wrote and this is a quote “Consumers shouldn't be stunned with predatory charges when they make a health care choice such misleading behavior is unconscionable”.

PAUL: Absolutely.

ROSS: So, there are some things that we can do about it right. I know Blue Cross and Blue Shield of Texas is supporting some legislation that will help the attorney general pursue these, quote unquote “predators”.

DAN: Or unconscionable charges.

ROSS: These unconscionable charges. Tell us a little bit about that and how we're trying to make a difference for our state.

PAUL: Because really it's murky right now, right. So, we need to clarify the law that says yes this is an appropriate thing for the attorney general to go do to protect people, right. They need the protection.

DAN: And it really makes sense really that if a natural emergency, it puts people in vulnerable and captive situations then, so should a personal emergency, right. So, there's no difference. It's still an emergency as an individual.

PAUL: Absolutely.

DAN: Whether or not you don't have gas in your car or your kid is sick there’s really no choice. You're still a vulnerable person. Paul, thanks for being here. Thanks for joining us for this edition of Blue Promise.

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