Christopher Jacobs writes for the Federalist about a key factor limiting the prospects for significant health care reform.
How’s this for bipartisanship? Groups on both the left and the right can agree on not just a major policy problem but potential solutions for it.
Yet corporate influence and lobbying have stymied action on reform for far too long. Welcome to America’s dysfunctional health care system — brought to you in part by Big Hospitals.
Recently, the left-leaning advocacy group Families USA released an analysis of hospital pricing data, with a particular focus on big corporate chains. For 15 large systems, the hospitals charged commercial insurance an average of 282 percent of Medicare rates, while earning an average of $22.1 million in net income per hospital.
Breaking down the data by various metrics (rural versus urban, etc.), the prime differentiator became apparent. Independent hospitals charged an average of 221 percent of Medicare rates, while earning an average of $3 million per hospital per year. By contrast, hospitals that comprised part of a larger system charged an average of 277 percent of Medicare rates, while earning an average of $27.7 million in net earnings annually — more than nine times the earnings of independent facilities.
The analysis comes with caveats, of course. Medicare’s bureaucratic-driven reimbursement formulae don’t necessarily represent the “right” price for a given good or service. And independent hospitals may have fewer beds than those in larger systems, which might explain some of the income disparity. But the trend appears clear: Big Hospitals both charge and rake in Big Bucks.
Why do these system-affiliated hospitals charge so much? In many ways, because they can. In practically every state, the top five hospital systems control at least half of the market. The more market clout these large systems hold, the more they can engage in anticompetitive, take-it-or-leave-it tactics with insurers, which ultimately stick patients with the (higher) bill.
