Groundbreaking Study Shows Why Fixing Healthcare Costs Is Still a Top Priority

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http://www.alternet.org/news/155594/groundbreaking_study_shows_why_fixing_healthcare_costs_is_still_a_top_priority/

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The greatest rip-off in the world is getting worse. According to a groundbreaking study released last week (PDF), the cost of employer-based health insurance – which covers a majority of the population -- has risen at twice the rate of inflation during the Great Recession, even while Americans have come to use less medical services.

It is a tragic irony that even as Washington debates whom to screw over to cut the Phantom Menace of our federal deficit, it has so far failed to address the single most important factor driving those deficits over the long term (if we paid the same for health care per person as the 30-plus countries with longer average life expectancies, we'd be looking at budget surpluses). It's a problem that also leads to tens of thousands of unnecessary deaths annually, creates some of the worst health outcomes in the developed world, makes American firms less competitive in the global marketplace and contributes a great deal to wage stagnation for the middle class and the working poor.

In 2009, the Democrats passed a series of insurance reforms misleading dubbed “healthcare reform.” Many of those reforms were valuable tweaks to our private insurance system, and while many Americans are wary about the law as a whole, when asked about the specifics, most of the specifics in the law are quite popular. But Congress didn't reform the healthcare system in a way that would significantly "bend the cost curve," and the new study – which uses insurance industry data that was made available to the public for the first time (other studies extrapolated from Medicare payment data) – shows that the costs of medical services continue to climb much faster than the economy – or wages – are growing.

Chapin White, a senior researcher at the Center for Studying Health System Change, told Kaiser Health News that the report shows that working people covered by their employers "are paying more and getting less" because hospitals and other medical providers "just seem to be able to raise prices faster than general inflation."

[Scuba]

1. because hospitals ... "just seem to be able to raise prices faster than general inflation."

Whoever wrote that has no understanding of how hospitals set rates.

[rfranklin]

2. Perhaps you can share your knowledge?

I don't understand how we have rates double those of other developed countries while results lag far behind.

[Scuba]

3. It's the "seem to be able to" part this misses the point...

What you're really seeing is cost shifting, that's why there are different rates for people with insurance, Medicare, self-pay, etc.

Many states have a "rate setting commission" which approves (or not) the increases that a hospital will propose implementing.

Medicare and Medicaid set the rates they will pay, the hospitals do not.

Hospitals negotiate rates with insurance companies. Usually, insurance carriers have the stronger position in that they can direct all their covered lives to a different hospital if they don't wish to pay the rate the hospital wants (needs) to charge.

Most hospitals in America are non-profit and are delighted if they make a 3% margin to re-invest in plant and equipment, etc.