Price Transparency
Hospital Payment Caps Could Save State Employee Health Plans Millions While Keeping Hospital Operating Margins Healthy (Health Affairs)
Roslyn C. Murray, Christopher M. Whaley, Erin C. Fuse Brown, Andrew M. Ryan
As health insurance premiums continue to rise, state employee health plans are occupying an increasing portion of state budgets. State employers are often the largest purchaser or commercial health insurance in each state, given the volume of employees that they employ. As such, state governments are placed in a unique negotiating position to implement cost containment strategies. Researchers are estimating that payment caps set at 200% of Medicare rates could save states an average of $150.2 million per state for employee health plans and ultimately lead to an aggregate national savings of $7.1 billion in a new Health Affairs article. The authors predict that such an action would not only decrease state expenditures but also help maintain healthy operating margins for commercial hospitals. As such, implementing state payment caps could be a promising cost-saving measure for state governments to consider in the future.
The Health Care Price Crisis Needs Policy Solutions (The American Journal of Managed Care)
Andréa Caballero
Health care costs are at an all-time high and are only continuing to rise due to increasing prices. While some previously believed that innovative dealmaking by employers for employer-sponsored health insurance premiums could curb rising prices, these predictions have largely proven false. The author of a new article in The American Journal of Managed Care found that since 2002 employer-sponsored health insurance premiums for families have increased from $8500 to $25,000. As hospitals continue to merge, service prices continue to grow placing a disproportionate burden on small and midsize businesses. For instance, only 47% of small businesses with fewer than 50 employees currently offer health benefits in the United States. An analysis of the data has led the author to assert that state and federal policy interventions are required to rebalance the market and improve health care value.
Healthcare System Reform
Promoting Access to Hospital Care in Rural Areas: Current Approaches and Ongoing Challenges (Health Affairs)
Caitlin Carroll, Victoria Berquist, Michael E. Chernew
Financial distress is a particular concern for rural hospitals and a routine concern for policy makers since hospitals operate just like any other business. Those that routinely perform poorly financially face a heightened risk of closure or mergers, which can adversely affect administrators’ ability to invest in quality improvements. In response to these concerns, the authors of a new Health Affairs article suggest two broad policy approaches for supporting rural hospitals. First, they suggest that policy makers need to more effectively target public funds to rural hospitals through Medicare or other public programs. Second, they suggest that regulation is necessary to ensure public benefit and limit the negative effects of reduced competition in markets that cannot support high-quality care at multiple hospitals in the region. While the problems facing rural hospitals are vast, policymakers can incrementally create positive impacts by using targeted strategies such as the ones suggested by the authors.
More US Pharmacies Closed Than Opened in 2018-21; Independent Pharmacies, Those in Black, Latinx Communities Most at Risk (Health Affairs)
Jenny S. Guadamuz, G. Caleb Alexander, Genevieve P. Kanter, Dima Mazen Qato
In recent years, policymakers in the United States have expressed concerns surrounding the closure of retail pharmacies throughout the country. However, until now limited data has existed regarding the extent of the problem. In a new Health Affairs article, researchers sought to quantify the issue by pursuing a deep dive of data from the National Council for Prescription Drug Programs and the National Center for Health Statistics. Specifically, researchers linked data from the different data sources to determine the number and percentage of pharmacy closures; identify pharmacy, neighborhood, and market characteristics associated with pharmacy closures; and estimate the risk of closures for independent pharmacies relative to chain pharmacies. In all, the authors found that 29.4% of the 88,930 retail pharmacies operating between the years of 2010 to 2021 had closed by 2021, with the risk of closure being particularly high in predominantly Black and Latinx neighborhoods and among independent pharmacies. Understanding these risks can allow policymakers to consider and propose more targeted solutions to prevent further pharmacy closures.
Healthcare Competition and Consolidation
Frenemies: Why the FTC Should Explore the Utility of State COPAs to Address Anticompetitive Consolidation in Health Care (Louisiana Law Review)
Alicia Gilbert
Certificates of Public Advantage (COPAs) are a regulatory tool that are used by the government to oversee mergers between health care providers that may otherwise raise antitrust concerns such as reduced competition or the risk of monopolistic practices. A new article in the Louisiana Law Review argues that states should look to increase the use of COPAs as a healthcare antitrust enforcement mechanism since they allow for improved consideration of the potential impacts of hospital mergers on price, output, quality, and access to care. Furthermore, the author argues that the Federal Trade Commission (FTC) currently ignores the potential of COPAs by critiquing the FTC’s 2022 COPA Policy Paper, which purports a blanket view of COPAs as a threat to competition. If taken up by policymakers, the author contends COPAs could allow for improved healthcare consolidation regulation and protect more consumers.