The most recent episode of The Week in Health Law podcast features The Source’s own Professor Jaime King! The episode, titled "Competition, Coordination, and Complexity," covers price transparency issues, provider competition and consolidation, and ERISA preemption.
In the discussion, Professor King explains how greater price transparency will help promote competition in some ways, but it will not solve all problems. The first model of price transparency directed at consumer rates only influences consumers who purchase “shop-able services” (services that patients assume are substitutable for one another, such as lab tests). Professor King suggests for these types of services, it is important to begin pairing pricing information with quality information. This will help drive down inflated prices for lower-quality care charged by providers with strong market power. Professor King sees the second price transparency model, which exposes the negotiation of prices between insurers and providers, as a useful tool for helping legislators understand the high cost of healthcare. Professor King also expressed some concerns about relying only on demand side healthcare reforms. The burden to curb costs cannot be placed solely upon patients to choose competitive options. Providers must also be given incentives to lower costs, which will most likely occur via regulatory means.
This podcast also highlights how various types of health system consolidations have become more frequent. Professor King points out that vertical integration, while incredibly useful for care coordination, can harm competition when achieved through a vertical merger. In addition, cross-market mergers (provider systems merging over wide geographic markets) can pose problems to competition. Cross-market mergers give health systems bargaining power because the systems can threaten to “knock a hole” in insurance networks. If an insurer does not accept an all or nothing price agreement from a health system that has acquired providers through cross-market mergers, the system can threaten to pull a wide span of providers out of the insurer’s networks. An insurance plan network that has holes in provider coverage becomes hard to market to consumers.
Additionally, Professor King talks about how the U.S. Supreme Court’s interpretation of ERISA preemption in Gobeille v. Liberty Mutual limits state efforts to reform healthcare. This interpretation prohibits states from passing reform bills effecting insurance plans run by self-insured employers because these efforts are preempted by ERISA. To enable more successful state efforts, legislators should considering limiting the reach of ERISA preemption.
As the discussion in this podcast shows, large scale reform is needed to curb healthcare costs and to guarantee quality and competitive access for consumers. We hope you tune in and enjoy listening to the podcast! You also can subscribe to The Week in Health Law podcast here.