Market forces are not working to curtail hospital prices which supports the discussion of Medicare for all.

Market forces are not working to curtail hospital prices which supports the discussion of Medicare for all.

The NY times recently reported that some hospitals are charging 3-4 times the Medicare allowable rate for the same services, and there is no transparency on why the hospitals are charging what they do.

Its no secret that healthcare prices in the USA are exorbitant, especially as hospital systems grow larger and are more difficult to negotiate with.

There are numerous examples of hospitals in Indiana charging four times the Medicare rate or emergency rooms in Colorado charging eight times the Medicare rate.

According to the Rand corporation, hospitals treating patients with commercial insurance were charging 2.4 x what Medicare pays for similar services, although to be fair, hospitals are also treating more Medicaid patients now that more people have Medicaid, and they are doing it often at a rate that loses money.  Are they simply cost shifting or are they being greedy?  Are they absorbing high deductibles that insurers have leaden the public with and then charging higher rates to make up for the shortages? Wouldn’t hospitals be better off with one payer that set a fair reimbursement rate for medical services, that paid regularly and reliably?

The market is opaque and clearly a market based system is failing insurers and employers alike. There is also a danger that is presented by huge hospital systems that sell us on the idea that bigger is better, but use their clout to charge more for hospitalization.  They are also buying doctors practices and using their increased clout to charge more for those medical services, while they also incentivize the doctors to refer to them for higher priced services.

The failure of today’s healthcare marketplace to rein in costs is likely to bring us a system where Medicare is the insurer.

There have been many proposals for a Medicare for all system that should be seriously looked at, but due to the way employers insure their employees, a transition to this type of system may be the only politically viable option.

There can be some savings by hospitalizing patients for procedures such as a C -section.  According to an Obstetrician who I spoke with recently, her hospital kept these patients for four days while another large hospital has been safely discharging them at 2 days which reduces costs and possible problems of infection.  Sometimes, costs are driven by medical culture which has difficulty evolving.

Read more here about what the NY Times has discovered regarding healthcare costs and why we need a system that has less market and more government involved with controlling and reducing healthcare costs.

Many Hospitals Charge Double or Even Triple What Medicare Would Pay

By Reed Abelson May 9, 2019

In Indiana, a local hospital system, Parkview Health, charged private insurance companies about four times what the federal Medicare program paid for the same care, according to a study of hospital prices in 25 states released on Thursday by the nonprofit RAND Corp.

Colorado employers were shocked to learn they were paying nearly eight times what the federal government did for outpatient services like an emergency room visit, an X-ray or a checkup with a specialist at Colorado Plains Medical Center, northeast of Denver.

Across the nation, hospitals treating patients with private health insurance were paid overall 2.4 times the Medicare rates in 2017, according to the RAND analysis. The difference was largest for outpatient care, where private prices were almost triple what Medicare would have paid.

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