Private Health Plans in the U.S. Pay Hospitals 247% of What Medicare Would Pay

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    • #359841
      eridani
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      • Total Posts: 9,653

      https://www.rand.org/news/press/2020/09/18.html

      The full report can be downloaded at a link through this website: https://www.rand.org/pubs/research_reports/RR4394.html

      A large portion of private health insurance contracting for hospitals is done on a discounted-charge basis where the insurer agrees to pay a percentage of billed charges. By contrast, Medicare issues a fee schedule that determines the price it will pay for each service, with adjustments for inflation, hospital location, the severity of a patient’s illness and other factors.

      RAND researchers suggest that private insurers may want to move away from discounted-charge contracting for hospital services and shift to contracting based on a percent of Medicare or another similar fixed-price arrangement, often called reference-based pricing.

      “In the case of specific high-priced hospitals, there may be justification for the unusually high prices, such as offering specialized services or a well-deserved reputation for higher-quality care,” Whaley said. “However, if two hospitals have similar quality, then any difference in prices may be harder to justify.”

      “Although many hospitals do face increasing costs, such as growing employment and personnel costs, increased needs for investments in electronic health records, and other technologies, the results of this study show that some hospitals are still able to charge much lower prices than other hospitals.”

      Comment by Don McCanne of PNHP:  Hospitals pay much higher prices for privately insured care than they do for the government programs Medicare and Medicaid. This difference is not due to higher quality care, but rather it is due to hospitals’ market power in being able to contract with the private insurers for higher prices, whereas the government programs use fixed fee schedule prices. Further, this study shows that the wide variation in prices paid demonstrates that low income hospitals are still able to provide high quality care.

      Also, the evidence indicates that higher private insurance prices did not correlate with lower prices paid by government programs. The report states, “the absence of a correlation between hospital prices and payer composition does not support the argument that higher hospital prices are in place to offset underpayments by Medicaid and Medicare.”

      Considering our very high health care prices in the United States, and considering that the private insurers have been ineffective in controlling hospital prices, shouldn’t that make you think that we should consider changing our health care financing system? Other nations that use global budgets to finance hospitals, much like budgeting fire departments, have been much more effective in controlling excess hospital spending.

      If you consider the historical health care spending curves in the United States and Canada, they were about the same until Canada enacted their single payer systems in the provinces. Canada then bent their cost curve to sustainable levels (maybe a little bit too low) whereas ours has continued on its unsustainable trajectory.

      How can we continue to look at these studies and then do nothing beyond occasional tweaking while leaving the private insurance industry in control of much of our health care spending? About $600 billion is wasted on the administrative burden created by this industry while they can’t even get pricing of hospital care right. We don’t need the insurers, but we do need the hospitals. We just need to fund them appropriately.

       

      Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction

    • #359849
      eridani
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      • Total Posts: 9,653

      A for-profit health insurance company makes exactly as much sense as a for-profit fire department.

      https://www.commondreams.org/news/2020/09/18/bolstering-case-single-payer-study-shows-profit-insurer-plans-pay-hospitals-nearly

      Lighty told Common Dreams that the research actually “creates a much stronger argument for Medicare for All than for the public option.”

      “The primary payment method for hospitals under Medicare for All would be a ‘global budget,’ which ensures that each facility has the resources to provide patient care for their patient population and service area,” Lighty said. “The public option simply introduces another ‘plan design’ into a system of plans that is causing the problem—the administrative complexity of network definitions and rate setting continues under a public option.”

      The Times claimed Medicare for All is a far more “controversial” solution than the public option—but both solutions are popular with the U.S. public. A survey by Kaiser Family Foundation in May found that 56% of Americans support Medicare for All, including eight in 10 Democratic voters. A separate poll taken by The Hill/HarrisX in April showed that 69% of respondents believe every American should be covered under the hugely popular Medicare program.

      The Times article brings up the frequently-expressed concern of Medicare for All opponents that hospitals would be unable to operate if they are forced to accept Medicare rates and are unable to price their surgeries, overnight stays, and other services at exorbitant rates for insurance companies.

      “We cannot survive in that kind of the world,” Tom Nickels, an executive vice president at the American Hospital Association (AHA), told the Times. The trade group further pushed back against the RAND Corporation’s findings on Friday, saying “the study again perpetuates erroneous suggestions that Medicare payments should be used as a benchmark for private insurers.”

      Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction

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