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IM 17 Opponent Concedes No Solid Examples of Cost Hikes from AWP Laws

The main arguments against Initiated Measure 17, the "Any Willing Provider" law, appear to be that insurance salesmen need more freedom and that our costs will go up. The former just makes me laugh; the latter is up for debate.

But a press release from the Yes on 17 crew points me toward a recent Yankton Press & Dakotan article in which state medical association president Dr. Mary Milroy says there is no evidence that AWP laws raise costs...

Milroy said there’s a lack of evidence that prices would rise, based on the experience of other states that have implemented similar programs.

“The interesting thing is (those other states) have not seen any increase in cost,” she said. “The opponents to 17 have said that it will increase costs. I will say there really is no credible evidence to suggest that would happen. ... I really think some of the main opposition has come from the business aspects of medicine” [Rob Nielsen, "Choice or Chaos?" Yankton Press & Dakotan, 2014.10.17].

...and David Owen, Chamber of Commerce chief and IM 17 opponent, concedes the point:

Owen said while they haven’t found a concrete example of price hikes in other states that have implemented similar programs, he says the scale isn’t quite comparable.

“Half of the states are pharmacy-only — South Dakota has any willing provider for pharmacy costs,” he said. “Very few of the states would have as broad of ‘any willing provider’ as we have here. What gets interesting is we have not been able to find a smoking gun by finding another state and saying, ‘Their rates are higher now because they adopted ‘any willing provider’” [Nielsen, 2014.10.17].

If you're going to make a cost argument, you'd better have some examples. The IM 17 opponents' cost alarm is ringing more faintly all the time against the clear gain in medical choice (also known as freedom) for health insurance customers.


  1. 96Tears 2014.10.29

    David Owen is a paid blowhard for those wishing to continue the pillage of middle class Americans. I'm not surprised he can't find facts to substantiate his nonsense. I was undecided on this, but now will vote yes on IM17 precisely because Owen's flapping his pie hole in the other direction.

  2. bearcreekbat 2014.10.29

    In today's (Wednesday) RC Journal, John Tsitrian's column claims there will be increased costs if IM 17 passes, and he argues against it. I am usually impressed by his arguments, but given the complete lack of evidence of rising costs, that argument seems specious. He also argues that adoption of IM 17 will reduce care for indigents by non-profit hospitals. Since we have County Poor Relief programs to assist indigents, this also seems like a bogus argument. Like 96, I am leaning strongly toward a yes on IM 17.

  3. John Tsitrian 2014.10.29

    Cory, here's a September '14 national study from George Mason University that doesn't break down costs state-by-state, but does conclude that healthcare costs have gone up from 3% to 6% (p. 10) and that the number of insurers has decreased (p. 9) in states that have AWP in effect. Not sure if anyone has analyzed this on a state-by-state basis, but the evidence that costs go up is pretty compelling.

  4. John Tsitrian 2014.10.29

    Oops. And here's the George Mason U. study. P.S. I've got more:

  5. Charlie Hoffman 2014.10.29

    Great article which has zero partisanship in the pro and con of finding truth in what IM 17 exactly does. The problem is that there is so much confusion many folks who have not studied this and asked questions may vote no just because they don't understand it. I am hoping that the last push with postcards and aired commercials turns the tide and we see ground swell of support from all walks of life. I questioned the total corporate buy ins paying for the ads against this as a grass roots call to arms would have at least made some of us assume that the general public was involved. A very trusted doctor friend of mine gave me his promise that his small business would never be for this if there were any data showing a cost increase to the consumer; his clients.

  6. John Tsitrian 2014.10.29

    bcb, please check out the study I cite above. I couldn't be more specific in the RCJ column because of space limitations, but believe me, I wouldn't make a claim like this if I didn't have plenty of back-up. Here's a piece from Roll Call last August that quotes a FTC conclusion that "AWP laws tend to raise prices or spending" with respect to pharmaceuticals. As with the George Mason study, I'm sure the FTC's study is based on a macro analysis of the United States, not a state-by-state one. file:///C:/Users/User/Downloads/1551_001%20(3).pdf

  7. jerry 2014.10.29

    I do not believe that AWP added to the mix will lower healthcare costs. I think it will add to the already bloated expenses South Dakotans now pay for healthcare costs. The real winners in this will be the chiropractors as this really seems geared towards them in my opinion. I know from experience what a plan from them can entail as far as long term treatment for a very simple remedy. But here is what others say.

    Maybe in the end, it will be much ado over nothing.

  8. leslie 2014.10.29

    Koch Brothers crew sits on George Mason University boards so I always suspect such think tank support

  9. Kate 2014.10.29

    I had been unsure of how to vote on this measure. Then I read David Owen opposes it. That alone is reason enough for me to vote for it.

  10. Douglas Wiken 2014.10.29

    I suspect this initiative really shows another failure of the legislature and the SD insurance commission. There must be a better way that leaves no ambiguity as to whether this reduces costs and provides insured with more options. When we have rich doctors vs rich hospitals and insurance systems, it is hard not to suspect that the sick and ill will be left in the lurch.

  11. mike from iowa 2014.10.29

    3. Imposing AWP requirements will lead to higher health care prices, which translate into higher premiums for consumers, according to a third analysis from Stephen T. Parente of the University of Minnesota and Robert Book from Health Systems Innovation Network.

    Illustrating the extent of premium increases, Parente estimates the average South Dakota family enrolled in an Exchange plan could pay up to $5,000 more over 10 years if the AWP law kicks in.

    The analysis also highlights the fact that health plans make broad and smaller network plans available to their members. However, “an any-willing-provider law effectively takes this choice away, by forcing individuals and families to take the broader network with the higher premium.”

    - See more at:

  12. leslie 2014.10.29

    can denny or mike enlighten us?

    perhaps "SDGOP crony capitalism" will be classified by the legislature next session as a disorder in the DSM IV so rounds et al can get treatment and then escape prison and become contributing members to society.

  13. Steve Sibson 2014.10.29

    If mike from iowa's number is right (extra $5K over 10 years), then it may be fair to say that it will cost us $500 a year to make sure we have a choice over doctors and treatments versus going down the current path where Avera and Sanford controls almost every aspect of our healthcare. Also keep in mind that the little provider will have an opportunity to compete against the two corporate medical establishment hospitals/insurance giants.

  14. John Tsitrian 2014.10.29

    mfi, I've got that one in my back-up files, too. People have to understand that this isn't really about patient "choice," it's about enriching for-profit specialty care health service operations. They don't have to skim the surplus from insurance payouts to make up for losses in their indigent care services, because they don't provide those services. Out here , Rapid City Regional does just that. If RCRH loses a significant pool of its insured, paying clients to local for-profit operations, it has to charge more for its insured services to cover losses in their "charity wards," and those are costs that are passed on to everybody who pays for health insurance. Meantime, the for-profits are getting the cream of the business without having to subsidize a money-losing charity care operation.

  15. Steve Sibson 2014.10.29

    "it's about enriching for-profit specialty care health service operations"

    Here in Mitchell the so-called non-profit Avera is making enough profit to help build Rec Centers and huge medical complexes that will hold the doctors they plan on controlling.

  16. JeniW 2014.10.29

    Doctors are free to have a private practice. They are not forced to be in any health system like Avers, Sanford, Mayo, or any of the Universities, they make that decision.

  17. Dave Baumeister 2014.10.29

    Even if this passes, wont the Sanfords and Averas still be able to offer cheaper prices for those who use their docs? When I look at my medical bills now, I always see the "regular price" and the "negotiated" lower price. They will always be able to negotiate a lower price for their own doctors. And I suspect, people will go to the doctor where they pay the least amount of money. I have Sanford insurance, and right now they list "in-network" and "out of network" deductables. So they cover the other doctors, just not as much. I don't see how 17 would change that. If I am missing something, I would appreciate any enlightenment offered.

  18. Jana 2014.10.29

    South Dakota is unique in that it allows for physician owned specialty hospitals...and for hospitals to sell their own health insurance plans.

    There is probably a good reason other states do not allow either of those to exist.

    Not quite sure that patients were the first priority.

    Just another example of the GOP 40 year rule over South Dakota representing business over people.

    Ewwps...corporations/hospitals are people too.

    Guessing that won't change.

  19. Roger Cornelius 2014.10.29

    If Charlie Hoffman thinks IM17 is good for South Dakota, it must not be.

  20. JeniW 2014.10.29

    Jana, as long as anything generates revenue for the state, and it is not illegal, the state will allow anything. LOL

    Money talks far and wide.

  21. jerry 2014.10.29

    Yep, when you see the Charlie Hoffman brand, it is like the kiss of death. I guess this really makes the position of a "NO" vote stronger than ever. Isn't this the same guy who thinks an oil pipeline through his place is not such a bad idea?

  22. Les 2014.10.29

    """"Isn't this the same guy who thinks an oil pipeline through his place is not such a bad idea?""""". Huh?

  23. bearcreekbat 2014.10.29

    John, I cannot get your Roll Call link to work, nor can I find any of the information you cited on a George Mason University study showing an increase in insurance prices based on the state law that does what IM 17 purports to do. Perhaps you have a better link you could cite?

    I cannot see why insurance costs should go up so long as the provider agrees to the same rates. In the policies that I have reviewed that offer a wider choice of providers, the reimbursement goes to the consumer, not the out of network provider, and that out of network provider can still claim the excess from the consumer.

    And what about Owen's statement that they haven’t found a concrete example of price hikes in other states that have implemented similar programs?

  24. John Tsitrian 2014.10.29

    bcb, both links are to pdf files so you'll have to c & p from the word file all the way through the end of the link. Kind of a pain, sorry, but that's how I got them. The problem is not the provider agreeing to a specific rate, it's that the pool of insured that had been contained within preferred providers has been diminished because many of them will migrate to specialty providers. That means the former "preferred providers" have a smaller market and less income trying to support the same level of fixed costs, including the sizable costs of providing charity care. In order to support those costs they have to raise prices. Those prices will be passed on to insurers, who will then pass them on to their customers. As to county payments, RCRH tells me that $36 million figure is over and above all reimbursements . RCRH won't pull back on its charity care services, it will just have to raise prices for the smaller number of patients they'll see if IM 17 passes. Considering that chiropractors, physical therapists, optometrists and other specialized health care organizations support this measure, you can see that the existing pie will be dished out to a lot of providers, and that supporting all those "willing providers" will cost a lot of bucks. Keep me posted if your linkage troubles continue.

  25. Joe K 2014.10.29

    As a person who used to work for collections for one of the large hospitals in SF, "charity care" is kind of misleading. Yes, we wrote off bills for those who could not afford them. However, the process was complicated, requiring loan denials from banks (and negatively impacting their credit), proof of no assets, and usually lack of full time employment. Also, we had legal council that would pursue county poor relief. Usually, what would happen would be an acceptance of a small payment on a large bill, once county poor relief was denied. Something like $25 dollars a month on a multi-thousand dollar hospital bill - if the debtor would cooperate. The ones that were wrote off for "charity" - most likely would have been covered if the state expanded medicaid. In short, charity care was only provided to those accounts that we had no chance in recovery. From my experience, I see no impact of IM17 on the hospitals in regards to their "charity." Ones who have health insurance in the first place, are typically in a better financial position to pay for their services, if even in small payments, which the major hospitals accept all the time.

  26. Joe K 2014.10.29

    On a side note, remember that Avera is a non-profit, while Sanford is for-profit. Avera builds and expands because they have to spend their income, while Sanford builds and expands because they have the money to burn.

  27. caheidelberger Post author | 2014.10.30

    It would be a darn shame if Sanford had less money to build gymnasia.

  28. caheidelberger Post author | 2014.10.30

    John, if the preferred providers (and in this case, aren't we talking mostly the big hospitals who are trying to vertically integrate with insurance?) have fewer patients and thus have greater difficulty subsidizing charity care, don't the non-preferred providers see a commensurate increase in patients, revenue, and ability to subsidize charity care? Is it a wash in the end?

  29. Bill Fleming 2014.10.30

    Don't let Charlie scare you away from a Yes on 17 vote, Roger. You know what they say about stopped clocks. ;-)
    I'm having trouble following John's argument. Why wouldn't we want to empower our doctors? And why should we support hospital monopolies? Competition is good, and results in improved service to patients.

  30. Bill Fleming 2014.10.30

    Is it about ER care?

    Are the big hospitals trying to protect all that market share? Big hospitals have to maintain a 'triage' mindset, which translates into a judgement call on the seriousness of the patient's condition.

    It's not intentional, but it means that the only people getting top quality attention are the ones who are either really really sick, or really really rich.

    Spreading the workload out to a bigger pool of providers fixes that. Plus, the last thing we need is to have the people who are supposed to be taking care of us when were sick fighting with each other over people, time and money.

    Every patient's need is the most important thing in the world to that patient. Our health care system needs to recognize that and treat their patients accordingly.

  31. mike from iowa 2014.10.30

    Joe K,I watched an ABC special on hospitals and how they treated insured vs uninsured. They negotiated all costs with insurance companies for the insured and lowered the bill considerably. For the uninsured,they were charged top dollar for everything and then bill collectors hounded the patients day and night. It was really ugly.

  32. Charlie Hoffman 2014.10.30

    Les I have totally underestimated my net worth to the political sphere in SD. Drill baby drill!!! Oil feeds the World folks!!!

  33. John Tsitrian 2014.10.30

    Cory, if the specialty providers would use those fresh batch of revenues to subsidize charity care I'd feel much differently about this. But I can assure you they won't use the windfall to open themselves up to providing care for the indigent. RCRH out here would still do the heavy lifting on it but have a smaller share of the "paying" market to draw their expenses from. That means the folks that can pay will have to pony up more money or charity care will have to be cut.

  34. mike from iowa 2014.10.30

    John T-aren't for-profit outfits required to provide minimum assistance(patient stabilization) and then they can send poor patients to facilities that provide indigent care? I wonder what the ambulance bill looks like and how hard they will attempt to receive payment for such assistance.

  35. John Tsitrian 2014.10.30

    BF, I worship at the "competition is good" altar, but only if it's accomplished on that mythical level playing field. As long as specialty providers don't and won't (if IM 17 passes) provide free care for the needy, it's an uneven field. My RCJ piece notes that the big hospitals in SD gave out (in '12) $36 million in care over and above medicaid and other reimbursements. Specialty hospitals gave out a magnanimous $196 thousand. That spread won't narrow. Effectively, specialty providers will get a sizable boost in revenues without having to divert any of them to their non-existent indigent care services. Where do you see passage of IM 17 as a pathway toward more competition?

  36. John Tsitrian 2014.10.30

    Don't know the answer to your Q, mfi, but to me the numbers tell the story: $36 million/yr in costs for indigent care from the big hospitals vs. $196 thousand/yr in costs to the specialty shops. You can see why the list of supporters of this initiative includes chiropractors and other specialized health providers. It's a scam, my man, one foisted on South Dakotans who think "patient choice" are magical, power-to-the-people type words.

  37. mike from iowa 2014.10.30

    John,I knew the answer to my Q before I asked. They have large signs in the lobbies of for profit outfits with a list of minimum obligations so people are warned in advance. They also have long lists of language translators.

  38. John Tsitrian 2014.10.30

    Thanks for the info, mfi.

  39. lesliengland 2014.10.30

    i think you are right John. thanks

  40. JeniW 2014.10.30

    I read the wording three times because it was so vaguely written.

    It was is obvious that the IM17, if passed would favorably impact a select few of people, and not necessarily the people seeking treatment.

    Read the wording, then decide for yourself.

  41. Bill Fleming 2014.10.30

    John, seems to me your comparison on free care is one of apple to oranges. Of course the hospital gets more demand from the needy, that's where the emergency room is. And ER is where you go when you're sick and don't have health insurance. Every time we do a national direct marketing response test, we always get the most responses from California. Novices in the craft are always tempted to think that's where the marketing opportunity is. We have to remind them that the reason California is high is because that's where the most people live. That's why we have indexes. If more poor people went to specialty hospitals for care, there would be more donation, but right now, that's not the way the brands are positioned. My hunch is, hospitals like it that way because it gives them a chance to play the community guilt card. An old trick, but it works. Worked on you, and you know better. ;-)

  42. bearcreekbat 2014.10.30

    A little history sheds some light on why hospitals provide ER care to indigents. Unfortunately this is not altruism, rather, it comes from accepting huge grants of funds under the Hill Burton Act back until about 1997. A condition to the receipt of these grants required the recipient hospitals to guarantee that no person would ever be turned away from the ER, regardless of ability to pay. If I am not mistaken, RCRH obtained Hill Burton funds and took on the continued responsibility to treat the uninsured and indigent in the ER. If this is correct, then IM 17 cannot provide a legal basis for reducing uncompensated emergency room care to indigents. (Oddly, a link purporting to identify hospitals with Hill Burton obligations omits RCRH, yet I specifically recall litigation against the hospital in the 1980's or so that succeeded in requiring RCRH to comply with this Hill Burton ER requirement, as well as write off certain bills altogether as required by another HB provision).

    As for increasing costs for insurance, why would insurance companies care if they are able to simply pass the increased cost on to the consumer? (I never did get JT's links to work for me). Something else concerns these companies, and it is doubtful that they have the insured's interest in mind.

    Finally, it looks like those persons with insurance using a network will be able to go outside the network at a greatly reduced cost under IM 17. This seems a reasonable trade off if the insurance cost really will increase.

  43. Douglas Wiken 2014.10.30

    I voted today and read the initiative and explanation much as did JeniW. I vote "no". The initiative raises questions that should be settled unambiguously in the patient's interest by the legislature and the insurance commission. There is absolutely no excuse for allowing hospitals and doctors to charge customers who may cash immediately more than insurance of government. The cash price should be the lowest of all the negotiated rates. And maybe people will also figure out that Dudley Daugaard's refusal to accept $45 million from feds just drives up costs for paying patients.

  44. john tsitrian 2014.10.30

    My last post on the subject. Here's from a March, '14 analysis (see page 3 of the link) by the Federal Trade Commission: "FTC staff have previously expressed concerns about potential anticompetitive effects
    and consumer harm associated with any willing provider and FOC laws.16 Although more
    limited networks may sometimes limit patient choice, any willing provider and FOC laws can
    make it more difficult for health insurers, plans, or PBMs to negotiate discounts from
    providers, resulting in higher costs. If plans cannot give providers any assurance of favorable
    treatment or greater volume in exchange for lower prices, then the incentive for providers to
    bid aggressively for the plan’s business – by offering better rates – is undermined.17 At the
    same time, any willing provider and FOC provisions may also reduce incentives for plans to
    invest in plan designs and complex negotiations with pharmacies and manufacturers. Any
    willing provider and FOC provisions can therefore undermine the ability of plans to reduce
    costs. This is likely to result in higher negotiated prices, ultimately harming consumers. Any
    willing provider and FOC laws can also limit competition by restricting the ability of
    insurance companies to offer consumers different plans, with varying levels of coverage,
    cost, and choice. These restrictions on competition may result in insurance companies paying
    higher fees to providers, which generally lead to higher premiums, and may increase the
    number of people without coverage." And here's the link:

  45. jerry 2014.10.30

    The Anguished Leader has an editorial that declares their support for a NO vote on 17 from their editorial board.

  46. Bill Fleming 2014.10.30

    Jerry was the editorial bookended by a couple of Full Page 4/Color ads from Sanford and Avera Hospitals?

    Some "Get out of ER FREE!" or "Show us your NO vote and your next barium enema's on us." coupons maybe?

  47. bearcreekbat 2014.10.30

    John, Thanks for the link and your quotation from the link. I read the entire report in the link and found it interesting and informative, although the focus was on fungible drug prescription plans rather than individualized treatment from a medical provider. I am not sure that the report's conclusions make sense or are supported by much empirical evidence, but the arguments make much more sense than the tripe we have seen on TV and in the ads.

    Currently it is my understanding that Wellmark BCBS offers a choice of plans - one, the basic plan, uses only preferred providers, and the other, the standard plan, allows reimbursement from providers outside the network. The basic plan costs about 1/2 the standard plan, but works quite well for consumers in the Rapid City market as almost all providers are in the network, so there is no need to go beyond the network, at least for typical medical problems. I am unsure how the network limitation might restrict coverage for serious and unusual illnesses, such as some forms of cancer, if the appropriate provider was only available in a specialty hospital outside the network. In such a case, IM 17 might be the only law that would avoid putting a person in bankruptcy.

    The issue is complex, but the claims of proponents and opponents seem generally disingenuous. Your arguments make some sense, yet even the information provided by the link leaves questions open. Perhaps the most logical choice would be to enact IM 17, study the results, and then consider changing or repealing it if consumers were actually harmed.

  48. caheidelberger Post author | 2014.10.31

    I'm intrigued by Bearcreekbat's "try it and see what happens" approach. Is that too risky a policy position? Just how much harm is at stake if the opponents' claims are right?

    My insurance agent sent out a mass e-mail encouraging his clients to vote no on 17 to avoid higher premiums. I like my insurance agent, although he's always trying to sell me more stuff. Hmmm....

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