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High Healthcare Costs Continue to Provoke Finger Pointing

Jeff Elliott, for HealthLeaders Media, February 9, 2011

Healthcare providers and health plans are at it again, bickering over who holds the cards when it comes to negotiating rates. If you recall, late last year the Center for Studying Health System Change issued a report stating that in many markets, providers had enough clout to negotiate "higher-than-competitive prices," putting insurers at a disadvantage and ultimately driving up premiums.

In Miami, for instance, average inpatient hospital payment rates of four large national insurers were nearly 150 percent of Medicare's rates and 210 percent in San Francisco. "In extreme cases, some hospitals command almost five times what Medicare pays for inpatient services and more than seven times what Medicare pays for outpatient care," according to the study.

The American Medical Association (AMA) delivered its retort via the annual "Competition in Health Insurance: A Comprehensive Study of U.S. Markets" report. With 2008 enrollment data from HMOs and PPOs in from 359 metropolitan statistical areas throughout the country, AMA found that in 60 percent of the markets, the two largest insurers had a combined market share of 70 percent or greater.

In 18 percent of the metropolitan statistical areas, at least one insurer had a market share of 70 percent or greater, indicating "a significant absence of competition among insurers," according to the AMA. "When insurers dominate a market, people pay higher health insurance premiums than they should, and physicians are pressured to accept unfair contract terms and corporate policies, which undermines the physician role as patient advocate," said association President Cecil B. Wilson in a statement.

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9 comments on "High Healthcare Costs Continue to Provoke Finger Pointing"


William Mandell (3/5/2011 at 4:02 PM)
Just would like to make the distinction in pricing is what the article is really about. What things cost can be much different. The actual cost of providing care is much different than what is paid. Medicare pays much less and sometimes healthplans pay much more.

Robert Trinka (2/14/2011 at 11:04 AM)
Healthcare is the only industry in which the people who design and deliver the product/service are not responsible for the cost of the product/service. Insurance companies are financing vehicles - physicians primarily, hospitals and other providers of services are accountable for the product/service's quality and cost. Insurers and other payers including the federal government resort to reimbursement limitations and contracts only because physicians and hospitals have shirked their fundamental duty. The challenge for the healthcare system is to produce products and services that their customers/patients can afford. Then we will see real competition, real productivity improvement and real cost reduction.

R Daniel King (2/13/2011 at 10:14 AM)
The federal government has for decades mandated that a [INVALID] 2 million patient/residents are daily subjected to (1) increased consumer education and awareness, (2) prevention and wellness programs and (3) consumer-controlled comprehensive health record that facilitates monitoring, measurement and management as suggested in a following comment. All these so-called silver bullets self-interest supposedly do not want in place for the general population has been carried on in skilled nursing facilties in every state. Yet because few SNFs are efficient, quality driven facilities most of these mandated efforts fail at various degrees increasing preventable hospitalizations, medications, death, and chronic problems. To assume what has failed under the second most federally regulated environment for a population of 2 million patient/residents under minute to minute monitoring can achieve a 30% savings for the total US population is a millennium away from reality. It is easier and quicker to change the health care deliverys system's culture than the hundred of thousands of cultural difference through out American cities and towns that can lead to medical problems. Not until the health care industry has the courage to realize the barrier to the most efficient delivery of quality, universal, integrated care is the status quo will win/win/win change ever take place.