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January 17, 2020
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David Burda
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Economics Policy System Dynamics
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7 Ways States Can Save Consumers from Rising Healthcare Prices

Competition, regulation or both? Those are the choices facing states that want to make healthcare more affordable for their residents after years of unbridled prices hikes from providers and premium increases from commercial health plans.

In a new 98-page research report, the Urban Institute supported by a grant from the Commonwealth Fund, outlined seven options for states to wield their policy-making authority to make their healthcare markets work better for consumers in terms of expanding access, reducing costs and improving quality.

The report’s researchers said the responsibility to make healthcare markets work better has fallen to the states as the federal government fiddles, providers and payers consolidate and patients’ explanation-of-benefits forms burn. In-other-words, the growing lack of competition in healthcare markets is killing us.

“Over the last decade, the federal public policy response to address increasing prices that result from consolidation has been absent or ineffective,” the report said.  

So what are states to do? The report lists seven options to either restore and energize competition or regulate in lieu of price-controlling, quality-improving and access-expanding competition. 

To restore or energize competition, the report listed the following tonics:

  • Promote price transparency for consumers, particularly through the use of data from all-payer claims databases
  • Strengthen antitrust enforcement by state attorneys general by stopping anticompetitive consolidations before they happen, placing anticompetitive restrictions on approved consolidations and seeking legal remedies against providers and payers who engage in anticompetitive behavior
  • Develop state public option health plans to compete in markets dominated by one or two commercial health plans

 To regulate prices and premiums in lieu of competition, the report offered the following cures:

  • Develop state commissions to address the drivers of healthcare costs and prices and recommend solutions
  • Develop insurance and provider rate-review and approval regulations
  • Impose price limits on state employee health benefit plans
  • Develop new approaches to state-based, hospital rate-setting mechanisms

In some cases, it may take both to get things under control, the report said.

“Certain approaches to regulation complement and support efforts to improve market competition,” the report said. “States do not have to select one course or the other but can take action in both areas.”

It’s come to this. The Healthcare Industrial Complex® has rendered the federal government so ineffective at protecting consumers from escalating healthcare prices that states have to inject a mix of competition and regulation into their healthcare markets to make them work. It’s like alternating Tylenol and Motrin to bring down a high fever during flu season. Let’s hope it works on the patient.

To learn more on this topic, please read “Will 2020 Be the Year that Healthcare Gets More Affordable?” on 4sighthealth.com.

Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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