Wednesday, November 16, 2011

Yet Another Way Obamacare Will RAISE Health Costs

Earlier this week, the National Institute for Health Care Management released a new analysis outlining one of the ways in which Obamacare could raise health costs, by encouraging consolidation that allows dominant health care providers to charge higher prices.  The paper notes that “the integration of hospitals and physicians into the accountable care organizations encouraged by [Obamacare] is expected to accelerate provider consolidation in local markets.”  And the result of that consolidation?  “Hospitals in concentrated markets charge significantly higher prices to private payers than do their peers in more competitive markets.  Furthermore, these prices are significantly above their direct costs of providing care.”  For instance, prices for angioplasty procedures were nearly 50% higher in concentrated (i.e., non-competitive) markets than in competitive markets – and profit margins were higher as well.

As a reminder, candidate Obama repeatedly promised to CUT premiums by an average of $2,500 per family.  And in June 2009, President Obama claimed that any health care legislation must control costs: “If any bill arrives from Congress that is not controlling costs, that’s not a bill I can support.  It’s going to have to control costs.”  This latest report, by indicating how provider consolidation will lead to higher charges for patients, once again illustrates how the 2700-page law falls short of its promises.