[Rather than force hospitals to be up front with patients about
their costs, we should strip them of the power to set them.]
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WE’LL NEVER FIX HOSPITALS’ PRICE GOUGING IF WE DON’T BREAK
THEIR STRANGLEHOLD ON CONGRESS  
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Natalie Shure
July 27, 2021
The New Republic
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_ Rather than force hospitals to be up front with patients about
their costs, we should strip them of the power to set them. _

, Apu Gomes/Getty Images

 

Nearly every hospital in the United States appears to be flouting
Trump-era rules mandating price transparency, according to a bombshell
new study
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Put into effect on January 1 under the Trump administration, the new
directive requires hospitals to make rates they negotiate with
different insurers for procedures publicly available—a move
proponents argue curbs runaway health care costs by stripping
hospitals of the market-hobbling opacity that’s long benefited their
bottom lines. The new research published by the nonprofit group
Patient Rights Advocate determined that 471 of 500 hospitals examined
were not in compliance with the new rule, results even more shocking
than a previous study
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in the _Journal of the American Medical Association_ estimating a mere
80 percent of hospitals to be in violation. The Biden administration
recently directed
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the Department of Health and Human Services to enforce the rule as
part of his extensive executive order aimed toward facilitating market
competition.

It’s worth emphasizing just how conservative this line of thinking
is: Not only does the fetishization of price transparency endorse the
idea of health care as a market good, it also embraces a vision of
patients as consumers, saddled with the arduous task of dutiful
comparison shopping whenever they require care. Never mind that the
path to universal health care in practically every country that has it
relies heavily on public sector financing and coordination, instead of
an optimized marketplace.

The price transparency policy was largely pushed by Cynthia Fisher, a
Republican donor who convinced Donald Trump
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to enact the rule. Her goal is not just to reduce prices but to stand
as a xxxxxx against more far-reaching change. In an interview
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last year with Morning Consult, she said, “This is a shape-shifting
moment—we’re at this inflection point.… It is probably the last
moment of time for transparency, or we go to Medicare for All.” But
Medicare for All, not a piecemeal market-based approach, is the only
way significantly to reduce America’s uniquely high medical bills.

Though insurers are often the most villainized part of the system,
hospitals shoulder plenty of blame for our health care catastrophe.
Hospitals gobble up almost a third
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our national health care spending, topping $1 trillion
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annually. The American Hospital Association is one of the most
formidable trade groups on Capitol Hill and has been a fierce opponent
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of not only single-payer but the public option and other watered-down
reforms, as well. In most cases, it’s safe to say that hospitals
have the upper hand over insurers
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when it comes to reimbursement negotiations, particularly when they
consolidate
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or otherwise dominate a given geographical area.

The sums that hospitals are able to extract from payers have been
widely lambasted as both astronomical and irrational, differing by
tens of thousands
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within the same hospital or for the same procedure, depending on a
patient’s insurance plan. In extreme cases, hospitals have come
after their own patients
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with lawsuits to recoup medical debt, roping them into ruinous
repayment plans for years after their treatments. In short, hospitals
are so unsympathetic that critics frequently chide left-of-center
health care commentators
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for going easy on them compared to insurers, implicitly echoing the
conclusions invoked by the title of the legendary 2003 paper
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economist Uwe Reinhardt that health care costs are largely driven by
hospitals’ eye-popping reimbursement rates: “It’s the prices,
stupid.”

But what if the problem is the existence of “prices” at all? Why
do we talk about the “price” of an appendectomy and a blood
transfusion but not about the “price” of one 40-minute math lesson
for a fifth grader and a half-hour of detention after school? In the
U.S. health care system, the “price” of a given service is the
amount a given facility gets reimbursed for it by the patient’s
payer—amounts that differ wildly depending on a variety of factors.
As historian Gabe Winant chronicled in his book
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_The Next Shift: the Fall of Industry and the Rise of Healthcare in
Rust Belt America_, the 1980s switch from calculating reimbursement by
length of patients’ stay to the “price” of care received only
served to spur the corporatization of hospitals by rewarding
capital-intensive high-tech and invasive care over the services
offered in simpler community hospitals—empowering the bigwigs to
bill for more high-cost procedures and snap up the smaller players
that couldn’t. This gave large hospital chains even more market
power to break the backs of whatever insurer tries to argue with them.


But the problem with that dynamic isn’t “prices,” it’s
power—a problem that price transparency does little to solve. To
borrow Winant’s example, it’s tough to imagine Pittsburgh insurers
holding onto too many customers were they to decide not to include
University of Pittsburgh Medical Center in their networks, suggesting
that listing negotiated prices could only apply so much downward
pressure through competition. But even in a perfect world,
transparency still wouldn’t offer much in the way of patient relief:
Most hospital visits entail thousands of dollars’ worth of care even
when coherently priced, so a slight reduction would leave most
patients with roughly similar out-of-pocket expenses, even if their
insurers save a bit on so-called “medical loss.” Framing that as a
boon for health care “consumers”—a ghastly phrase the proponents
of this scheme sure do seem to love!— is disingenuous at best.

Medicare for All, on the other hand, wouldn’t just obliterate health
insurance as we know it, it would upend hospitals’ ability to bilk
payers and patients in the process. With private insurers barred from
selling plans that duplicate the benefits of the single public pool,
and with providers barred from taking cash for procedures covered by
Medicare, hospitals lose the privileged position they enjoy over a
fractured field of insurers whose existence—unlike
hospitals—provides us exactly nothing of value. The vision outlined
in Representative Pramila Jayapal’s House bill essentially
transcends the concept of “prices” at all, allocating each
hospital a global operating budget akin to a fire department or
school. Medicare for All would also impart strict control over profits
and capital expansion: Hospitals wouldn’t be permitted to keep or
reinvest surplus revenue, or beef up facilities without public
approval, rendering it all but impossible for them to keep taking cues
from corporate playbooks.

As we move toward the more just hospitals of the future, we deserve to
aim beyond a tedious master list of prices. The Biden administration
is struggling to get hospitals to disclose their prices, but this is
fighting the battle the wrong way around. Instead, it should be
looking for a way to kneecap the power of hospitals to set them in the
first place. Scrapping private insurance is the best way to do it.

Natalie Shure [[link removed]]
@nataliesurely [[link removed]]

Natalie Shure is a writer and researcher in Boston. Her work focuses
on history, health, and politics.

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