Healthcare Cost Control
State Health Care Cost Commissions: Their Priorities and How States’ Political Leanings, Commercial Hospital Prices, and Medicaid Spending Predict Their Establishment (The Milbank Quarterly)
Brent D. Fulton, Daniel R. Arnold, Jordan M. Wolf, Richard M. Scheffler
As healthcare costs continue to rise, states play an increasingly important role in addressing affordability and cost containment. In this Milbank Quarterly article, researchers examine the political and economic measures in the 17 states that have created Health Care Cost Commissions (HCCCs). HCCCs are independent administrative bodies usually housed in the Department of Health, charged with tracking and analyzing health care spending and trends. Across states, HCCCs have varying degrees of authority such as imposing cost growth targets or levying fines when targets are exceeded. Through regression modeling, the authors determined that states that leaned politically Democratic with higher commercial hospital prices and greater Medicaid spending were more likely to create HCCCs. Additionally, states with HCCCs were more likely to have pro-competitive statutes in place, such as merger review authority and/or a ban on anti-competitive contract clauses. While HCCCs are designed to gather and analyze date with the goal of reducing healthcare spending, they are relatively new entities, and their longer-term effects have yet to be determined.
State Health Care Cost Growth Targets: Moving From Aspiration To Evidence To Action (Health Affairs)
Christopher F. Koller
As healthcare cost growth continues to outpace wages and inflation, state policymakers are confronted by the persistent reality of the “inverse relationship” between increased health spending and declining population health. In this concise article, Christopher F. Koller examines how some states have implemented affordability models to not only track health spending, but to understand drivers of increased expenditures (largely commercial outpatient visits and prescription drug prices) and to develop cost growth targets to curb health spending. He highlights various states’ programs devised to address the runaway costs of the commercial markets, which all center on standardized data collection and analysis and public transparency. He argues for increased federal involvement, such as site-neutral Medicare payments or more robust antitrust enforcement, to complement state-level affordability efforts.
Consolidation and Competition
The Changing Landscape of Primary Care: An Analysis of Payer-Primary Care Integration (Health Affairs Scholar)
Loren Adler, Samantha Crow, Matthew Fiedler, Richard Frank, Rahul Fernandez, Derek Lake, Robert Tyler Braun
Vertical integrations of health systems continue to grow, but to date, there has been limited specific data about the growth of insurer-owned physician practices. While an integrated system has the potential to offer consumer benefits such as better care coordination or disease management, market consolidation can lead to increased prices and loss of competition. Authors of this Health Affairs Scholar article determined that the proportion of insurer-owned primary care practices rose from 0.78% in 2016 to 4.2% in 2023. Additionally, researchers examined several characteristics at the county-level to determine what, if any, patterns emerge in areas with a greater proportion of payer-owned practices. Insurer-owned primary care was positively associated with higher Medicare Advantage penetration and negatively associated with greater hospital concentration, increased hospital-primary care integration, and higher rates of employer-sponsored insurance.
Do Pro-Competition Healthcare Reforms Always Bring Health Benefits? Evidence from China (Health Systems and Reform)
Zixuan Peng, Audrey Laporte, Xiaolin Wei, Jay Pan, Peter C. Coyte
As consolidation in the healthcare sector increases, lack of competition can drive changes in pricing, quality, and accessibility. In this study of COPD in-patient hospital admissions in Sichuan province, China, researchers examine the impact of competition on quality-of-care indicators. Hospital types – private non-profit, government, or private for-profit – were classified as engaged in intra (same hospital type) or inter- (different hospital type) competitive markets. Quality of care indicators included length of hospital stay, likelihood or readmission, and mortality rate. Statistical analysis demonstrated a positive association between intra-type competition among private non-profit hospitals in both shorter hospital stays and lower likelihood of readmission. Inter-type competition and intra-type competition among government and private for-profit hospitals demonstrated lower quality of care in terms of longer hospitals stays and higher odds of readmission. The authors argue for a nuanced approach to facilitating pro-competitive markets, noting that competition alone may be an insufficient driver for improving quality of care.
Horizontal Consolidation in Healthcare Markets: Can Performance Incentives Preserve Access to Care? (Production and Operations Management)
Houyuan Jiang, Zhan Pang, Sergei Savin
Using a theoretical model, researchers aimed to demonstrate the effects of horizontal hospital mergers on patient access to care and how implementing bonus incentives impacts provider performance. Through a series of assumptions made to simplify pre-merger and post-consolidation market effects, researchers were able to show that when inter-hospital competition was relatively strong, bonus incentives did impact provider performance and increase patient access. In models with lower competition, patient access was more likely to be compromised post-consolidation. This study imparts insight in the relationship between market consolidation, performance-based incentives, and social welfare in healthcare.
Healthcare Reform
Same as It Ever Was? Persistence and Transformation in US Health Care Policy (Journal of Health Politics, Policy and Law)
Jonathan Oberlander
Jonathan Oberlander’s article in the Journal of Health Politics, Policy and Law is a brief, yet thorough, journey through the last several decades of health care reform in the U.S. He argues that the driving forces of reform – the crisis of high cost, inequitable access through lack of universal coverage, and fragmented healthcare financing – have persisted from the inaugural issue of the journal in 1976 until today. The U.S., through cultural, political, and economic influence, continues to treat access to health care as something one “deserves” rather than a universal right. Reform movements range from incrementalism, in which new demographic groups are granted access to insurance coverage, to the more robust change of the 2010 Affordable Care Act that created state-level marketplaces and further expanded Medicaid enrollment. More current reforms include cost containment measures, such as payment and delivery reforms, essentially, decentralized efforts at addressing runaway healthcare cost growth. Oberlander argues that as private insurers play an increasing role in public programs (Medicare and Medicaid), the line between private and public interest blurs and influence from increasingly large health systems further shapes public policy. As evidenced by the 2025 budget debate in Congress, healthcare cost shifting (to states and individuals) remains preferential to cost cutting and access to coverage continues to be precarious.