Health Policy Updates: September 9 2017

The September issue of Health Affairs was a special edition, focusing on the topic of health care market concentration in the US. I’ve pointed to the closely related issue of hospital consolidation as one of the biggest drivers of increasing health care costs.

As one of the featured studies in this special issue found, the health care market in the US continues to concentrate, with more and more health systems merging into larger and larger networks. The end result of this is not more efficient care for the patient, but simply higher prices, as these large networks exert their monopoly power:

“Although provider concentration could produce efficiencies that benefit purchasers of health care services, the evidence does not point in that direction. For example, reviews of studies of hospital markets have found that concentrated markets are associated with higher hospital prices, with price increases often exceeding 20 percent when mergers occur in such markets. Of even greater concern, the reviews found that these price increases did not appear to improve quality: In some cases, higher hospital concentration was associated with higher mortality rates.” 

NPR’s financial news&talk show Marketplace also covered the consolidation story:

“Stanford and several other large health systems in the area all argued that employing doctors allows them to improve the quality of their care. But Kristof Stremikis, associate director for policy at the Pacific Business Group on Health, which represents employers, said that studies suggest that is not the case. ‘All of the evidence that we see shows that the quality in these larger systems is the same or worse,’ he said…But what’s clear is that these big systems cost a lot more money. “

This week, the White House continued to announce budget cuts to the administration of the ACA/Obamacare. While still technically paying for the health care provided through the ACA, such cuts to advertising and enrollment would threaten the long-term health of the program, and could be viewed as a form of sabotage:

“Health and Human Services announced Thursday it would cut the Obamacare sign-up budget by 72 percent. Advertising funding will fall from $100 million to $10 million for the 2018 enrollment season. In-person outreach dollars will decline from $62.5 million to $36 million…The Affordable Care Act’s success hinges on a large number of healthy people enrolling in marketplace coverage. These policy changes only make senses as ones that would undermine that goal.”

Economists love to point out that, for multiple reasons, our predominantly employment-based health insurance system is a suboptimal way to do things. Aaron Carroll explained in the NYTimes why our reliance on this system is a historical accident:

“There are other countries with private insurance systems, but none that rely so heavily on employer-sponsored insurance. There are almost no economists I can think of who wouldn’t favor decoupling insurance from employment.”

What IBM’s “Watson for Oncology” does – and doesn’t do – so far.

“That training does not teach Watson to base its recommendations on the outcomes of these patients, whether they lived, or died or survived longer than similar patients. Rather, Watson makes its recommendations based on the treatment preferences of Memorial Sloan Kettering physicians.”


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