Mike the Mad Biologist

Since the Congress passed Romneycare, it’s worth looking at the major driver in Massachusetts of medical inflation–price gouging by hospitals and physicians groups that are able to set prices due to de facto monopoly power. From the MA Attorney General’s office (italics mine; underscore original):

In a presentation at the hearing, Attorney General Coakley, with the assistance of staff from her Health Care Division and two expert witnesses, outlined seven key findings that have powerful implications for the health care marketplace in Massachusetts…

2) Price variations for hospitals and physicians offering similar services are not explained by

  • quality of care,
  • the complexity of services or the sickness of the population being served,
  • the extent to which a hospital cares for a large portion of patients on Medicare or Medicaid , or
  • whether the hospital is an academic teaching or research facility;

3) Price variations are correlated to market leverage as measured by the relative market position of the hospital or provider group compared with other hospitals or provider groups within a geographic region or within a group of academic medical centers;

4) Variations in providers’ per member per month expenses are not correlated to the methodology used to pay for health care, with expenses sometimes higher for globally paid providers than for providers paid on a fee-for-service basis;

5) Price increases, not increases in utilization, caused most of the increases in health care costs during the past few years in Massachusetts;

6) Higher priced hospitals are gaining market share at the expense of lower priced hospitals that are losing volume;

7) The commercial health care marketplace has been distorted by contracting practices that reinforce and perpetuate disparities in pricing.

This is old-fashioned monopoly power. Maybe it requires old-fashioned trust-busting? Admittedly, most of the tamed, house progressive pundits wouldn’t dare mention something so uncouth, so liberal, especially since this report contradicts the following ‘progressive’* dogmas:

1) Healthcare is geographically variable, which reflects inefficiencies in the type of medical treatment (never mind the problems with the data used to support this position).

2) Fee-for-service leads to unnecessary procedures.

3) There are clever technological/informatics fixes to pricing problems (as opposed to doing the hard, confrontational work of stopping price-gouging).

I haven’t heard anything about how the proposed healthcare legislation will do anything to stop this. Anybody know? Because as long as there’s high cost inflation, healthcare, even Romneycare, will be unaffordable.

*I’m not a progressive (whatever that is), but a liberal.

Comments

  1. #1 6EQUJ5
    March 22, 2010

    Fifty years ago, hospitals were not for-profit. Then came the campaign to privatize hospitals because nothing was better than free enterprise at lowering costs.

    It worked. Hospitals are running as cheaply as possible, and they are still finding ways of cutting costs.

    The down side is that hospitals are charging what the market will bear. Free enterprise excels at maximizing profits.

    What, you think this was a bad idea?

  2. #2 JThompson
    March 22, 2010

    It doesn’t look like the current bill is going to help matters of cost a whole heck of a lot. I think some of the more liberal members of congress voted for it hoping the insurance companies and hospitals are going to keep pissing people off and eventually build enough of a backlash that we might get a real public option or single payer. I have far less faith in peoples’ ability to think for themselves than Kucinich and his ilk seem to.

    Of course if they really wanted to bring costs down, not keeping the ban on imported drugs would’ve helped a lot, even if it was from Socialist Communist Fascist Canada.

    *I’m not a progressive (whatever that is), but a liberal.

    Amen to that.

  3. #3 Donna B.
    March 22, 2010

    Non-profit doesn’t mean not viciously competitive or unwilling to cut costs for gain, it just means there are no shareholders sharing the profit.

    Far too many non-profits are big businesses.

  4. #4 Sledgehammer Joe
    March 22, 2010

    I doubt if hospitals will stop price gouging. I also doubt if unions will ever stop wanting more of everything thye have never earned.

    A letter of thanks to all those who made the healthcare bill possible.
    http://robhood.us/weblog.php

  5. #5 Rob Monkey
    March 25, 2010

    Yeah those dastardly unions! Grrrr! I’m so mad that working more than a 40 hour week gives you overtime, I’m so mad that workers have safety protections, and I’m REALLY pissed at all this namby-pamby Family Medical Leave Act bullshit. The corporations should be allowed to beat all employees, beating the good ones a little less than the bad ones. Stupid unions giving me worker’s rights and shit!

    Joe, you have the intellect of a sledgehammer, and that’s being damn generous.