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MD's hospital cost solution: regulated prices

The Bellingham Herald/Stateline.org, April 4, 2011

The new federal health law has created a flurry of hospital mergers as the industry prepares for major changes in financing and delivery of care. Some worry that the resulting behemoths will have too much price-setting power. In one state, however, monopoly pricing won't be a problem. The state sets the prices. For more than 30 years, Maryland has regulated the rates hospitals can charge, while all 49 other states have relied on market mechanisms to keep prices in check. For the most part, it has worked. The urban hospitals that serve large numbers of uninsured Maryland patients are financially strong, instead of nearly bankrupt like most inner-city hospitals. And everyone -- private insurers, the uninsured, and those on Medicaid and Medicare -- is charged the same amount. Maryland has the lowest price in the country for average hospital cases -- a little more than $13,000, compared with a national average of $32,500. The cost of health insurance in Maryland is second lowest in the nation as a percentage of median income.

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