Hospital rate-setting in Maryland

[Greenbeard]

Nice piece in Stateline earlier this week on the all-payer rate-setting system that determines hospital rates in Maryland:

For more than 30 years, Maryland has regulated the rates hospitals can charge, while all 49 other states have relied on market mechanisms to keep prices in check. For the most part, it has worked. The urban hospitals that serve large numbers of uninsured Maryland patients are financially strong, instead of nearly bankrupt like most inner-city hospitals. And everyone — private insurers, the uninsured, and those on Medicaid and Medicare—is charged the same amount.

Maryland has the lowest price in the country for average hospital cases — a little more than $13,000, compared to a national average of $32,500. The cost of health insurance in Maryland is second lowest in the nation as a percentage of median income. [...]

A regulatory approach works in Maryland partly because all stakeholders — hospitals, doctors and patients — have bought into it. Carmela Coyle, president of the Maryland Hospital Association, says the state’s hospitals strongly support the system and work closely with Murray’s 29-person regulatory staff on a daily basis. It’s “equitable and predictable,” she says, and it ensures that everyone has access to high quality hospitals. Facilities in poor areas of Baltimore, for example, do not suffer disproportionate financial burdens.

Mostly reiterates the Wall Street Journal piece from a few years ago that I've posted before ("Maryland Reins In Hospital Costs by Setting Rates "), though the WSJ piece had a handy graphic on hospital markups:

 

[Quantum Windbag]

Interesting how you gloss over the details that explain how this works.

From your link.

Maryland's rate-setting system does cost Medicare more. As part of an agreement with the federal government, Medicare pays state-established rates, which include a subsidy to cover charity care, as long as Maryland's hospital costs grow slower than Medicare payments nationwide. The subsidy, which is used to cover the uninsured, cost Medicare about $500 million this year.
With Medicare and Medicaid paying higher rates, Maryland hospitals aren't allowed to charge private insurers as much as they can to make up for lower reimbursement from Medicare and Medicaid, as it often happens in other states. The so-called cost shifting is a major factor in rising health-care costs nationwide.

Maryland gets to keep its cost down by making everyone in the entire country pay for their health care. You have 300 million people paying for 6 million people to get health care, no wonder those 6 million people pay less than the 300 million.

The fact is that, in a closed system, you do not control costs by setting prices.

Run back to your boss and tell him this is the stupidest thing you ever posted here,

 

[Meister]