Doctors and Plans Blame Each Other for Costs
The release of the AMA report prompted a swift rebuttal from America's Health Insurance Plans. The health insurance industry's lobbying arm published a statement on its website Wednesday that called the study's methodology "fatally flawed" and laid the blame for rising healthcare costs on provider consolidations.
"Families and employers in every state have multiple choices of both insurance plans and types of coverage. Moreover, research clearly demonstrates that provider consolidation—not concentration of health plan markets—is driving up healthcare costs for consumers and employers," AHIP said in the statement.
Mark Pauly, a healthcare economist at the Wharton School at the University of Pennsylvania, says both sides are correct. "Insurance markets aren't very competitive and healthcare services markets, particularly hospital markets, are not very competitive," he says.
"It's like two devils pointing the finger at each other from the point of an economist interested in competition, but they are both right. In economics, we have a name for the situation where you have a monopolist buyer and a monopolist seller. It's called bilateral bargaining, and consumers are left in the middle. So it's doubly bad for consumers."
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