Greenbeard
Gold Member
Sarah Kliff at the WashPo has a nice little article today on one of my favorite subjects: the inability or unwillingness of many health insurers to stand up to powerful health care providers to keep prices in check.
This is a point I've made a number of times (including here and here). There are multiple things that make insurance premiums go up--e.g. the proportion of sick people in your insurance pool, utilization of services, etc--but a big factor is the prices that providers are able to extort from insurers, even those who should have enough market power to push back.
One other interesting aside in the article:
This, too, is something I've touched on before. Massachusetts was a bit of a test case for this concept when the Patrick administration decided to ramp up its rate review in 2010. The result: the president of Blue Cross Blue Shield of Massachusetts admitted "It sent a message to the entire health care community...that we had to change" (the third quarter health insurance base rate increases in Massachusetts announced a few days ago average 1.2%, down from 1.8% in the second quarter). Not a panacea but a useful tool.
Finding ways to "inspire" health insurers to show a little more backbone at the negotiating table is necessary if prices are to be kept in check. This was the motivation behind the now-abandoned public health insurance option concept, it's a potential goal of rate review, and it's something that could conceivably be nudged a bit by the introduction of new competitors, like the consumer-owned co-ops currently being seeded and the insurance plans that will now be able to operate in multiple states. However, there are limits to the latter mechanism, as diluting the health insurance market also dilutes the clout of each insurer at the negotiating table with providers, thus negating part of what it's trying to achieve here.
The other, more powerful option is one that comes up here and there (and has been operating successfully in Maryland for several decades). But there isn't much need for more detail on it in this thread, it's described in an older one: http://www.usmessageboard.com/healt...-on-equalizing-payments-for-medical-care.html
Health insurers dont have a great reputation. Some even think theyre evil. Others say theyre heartless. But the real problem, according to a new paper in the journal Health Affairs, might be that when insurers sit across the negotiating table from hospitals and other providers, they turn into wimps.
For their part, health insurance plans arent putting much downward pressure on those prices. In discussing interviews with insurers and hospital administrators, Berenson describes insurers as seemingly resigned to the fact that hospitals will demand higher payments for their services.
According to both plan and provider representatives we interviewed, the researchers write, health plans have not recently been aggressive in negotiations with powerful providers....Terms such as truce and detente were used to describe the current state of relations between health plans and powerful hospitals. As a respondent from a must-have hospital said, Blue Cross Blue Shield is such a big player and we are such a big playerwe have to come to terms.
This is a point I've made a number of times (including here and here). There are multiple things that make insurance premiums go up--e.g. the proportion of sick people in your insurance pool, utilization of services, etc--but a big factor is the prices that providers are able to extort from insurers, even those who should have enough market power to push back.
One other interesting aside in the article:
The Affordable Care Act could help push prices down by requiring additional review for any premium increases over 10 percent. The rule could give health plan an incentive to demand lower prices from hospitals, if only to dodge additional regulatory scrutiny.
This, too, is something I've touched on before. Massachusetts was a bit of a test case for this concept when the Patrick administration decided to ramp up its rate review in 2010. The result: the president of Blue Cross Blue Shield of Massachusetts admitted "It sent a message to the entire health care community...that we had to change" (the third quarter health insurance base rate increases in Massachusetts announced a few days ago average 1.2%, down from 1.8% in the second quarter). Not a panacea but a useful tool.
Finding ways to "inspire" health insurers to show a little more backbone at the negotiating table is necessary if prices are to be kept in check. This was the motivation behind the now-abandoned public health insurance option concept, it's a potential goal of rate review, and it's something that could conceivably be nudged a bit by the introduction of new competitors, like the consumer-owned co-ops currently being seeded and the insurance plans that will now be able to operate in multiple states. However, there are limits to the latter mechanism, as diluting the health insurance market also dilutes the clout of each insurer at the negotiating table with providers, thus negating part of what it's trying to achieve here.
The other, more powerful option is one that comes up here and there (and has been operating successfully in Maryland for several decades). But there isn't much need for more detail on it in this thread, it's described in an older one: http://www.usmessageboard.com/healt...-on-equalizing-payments-for-medical-care.html