According to a professor at Yale’s School of Public Health, hospital prices are responsible for the high costs of health care, including the 320 percent increase in insurance premiums over the last 25 years. (Premiums for a family health plan can exceed $27,000 a year.) Prices at hospitals have grown three times as fast as inflation and twice as fast as prescription drugs and doctor visits.
In the U.S., hospitals earn $29,000 on average for hip
replacements that are covered by private insurance and $16,000 for those
covered by Medicare. In Germany, where 90 percent of the population is covered
by a public system of nonprofit insurers, hospitals receive $9,400 for a hip
replacement.
The reason for excessively high hospital costs is the
hospitals’ “accumulation of market power, which brings them more bargaining
heft when they negotiate prices with insurers.” Their market power is a result
of mergers: Since 2000, more than 1,300 out of 5,000 hospitals have merged. When
hospitals that were once competitors merge, prices go up. Now, 21 percent of
hospitals are effectively monopolies.
Because hospitals are the largest or second-largest employer
in many counties in America and spend more than $100 million on lobbying, politicians
who represent places with dominant hospital systems are not eager to fight with
these institutions. Moreover, chronic underfunding of the Federal Trade
Commission inhibits their ability to regulate the hospital monopolies.
According to the professor, the costs of fighting hospital mergers “would potentially
exceed the agency’s entire budget for antitrust enforcement across all sectors
of the economy.”
The professor says we should push back on mergers and
“scrutinize an industry in which 25 years of price increases have left care
unaffordable.” Pushing back and scrutinizing don’t strike me as very powerful
weapons.
For an introduction to this blog, see I Just Say No; for a list of blog topics, click the Topics tab.
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