High health care prices in the U.S. make it hard for people to access care, difficult for employers to provide insurance, and challenging for policymakers to balance health care spending with other budgetary priorities. That’s why it’s important to understand what drives prices higher and identify policies to keep prices from getting so high.
In a new paper in Health Affairs, Vilsa Curto, Anna Sinaiko and Meredith Rosenthal examined whether hospital and health systems’ acquisition of and contracting with physician practices – two forms of what is often called vertical integration – has led to higher prices for physician services. The researchers combined four sets of data from Massachusetts from 2013-2017 for their analysis.
They found that:
- The percent of physicians who joined health systems grew meaningfully: The percent of primary care physicians who remained independent dropped from 42% in 2013 to 31.5% in 2017, and the percent of independent specialists fell from 26% to 17%.
- Over this same period, prices for physician services rose. Price increases were especially large – 12% for primary care physicians and 6% for specialists – when physicians joined health systems that had a high share of admissions in their area.
This study stands out for several reasons. First, it shows vertical integration drives up health care prices. Second, the authors highlight actions states can and are considering taking to monitor and curb vertical integration, including antitrust enforcement and enacting laws to promote competition.
Finally, the Massachusetts data allow the public to better appreciate what’s happening across the state. Many earlier studies on health care consolidation have been limited to a subset of insurers, physicians or patients. Massachusetts is a leader when it comes to creating and sharing its data thanks to its all-payer claims database, which pulls together all the health care bills from private insurers and public programs like Medicare and Medicaid in the state. This critical information helps to illuminate patterns of care and prices and connect them to issues like consolidation and competition. Neither the federal government nor most states track how vertical integration mergers influence health care prices.
As these findings demonstrate, acquisitions and other forms of vertical integration impact what people pay for health care services. Given that prices in this sector continue to climb, this paper underscores the need for more state and national data to understand the downstream effects on all of us who use and participate in the U.S. health care system.
Part of the reason why medical debt is so high is because many Americans don’t have enough savings to pay their deductibles and other out-of-pocket costs, according to a second KFF analysis.
Driving the news: Health insurance plans’ out-of-pocket limits prevent enrollees from paying limitless sums of money for medical care. But that doesn’t mean they protect people from having to pay several thousands of dollars — which not everyone has lying around.
- Deductibles alone, which people must pay before coverage for most services kicks in, are frequently thousands of dollars and can exceed the amount of liquid assets a household has.
By the numbers: Over 40% of multi-person households can’t cover a mid-range employer family plan deductible of $4,000, and 61% don’t have enough to cover a high-range deductible.
- The ability to pay out-of-pocket costs varies significantly by income.
The cost of an ambulance ride has soared over the past five years, according to a report from FAIR Health, shared first with Axios.
Why it matters: Patients typically have little ability to choose their ambulance provider, and often find themselves on the hook for hundreds, if not thousands of dollars.
The details: Most ambulance trips billed insurers for “advanced life support,” according to FAIR Health’s analysis.
- Private insurers’ average payment for those rides jumped by 56% between 2017 and 2020 — from $486 to $758.
- Ambulance operators’ sticker prices, before accounting for discounts negotiated with insurers, have risen 22% over the same period, and are now over $1,200.
Medicare, however, kept its payments in check: Its average reimbursement for advanced life support ambulance rides increased by just 5%, from $441 to $463.
Between the lines: Ambulances aren’t covered by the new law that bans most surprise medical bills, meaning patients are still on the hook in payment disputes between insurers and ambulance operators.
State of play: Ground ambulances are operated by local fire departments, private companies, hospitals and other providers and paid for in a variety of ways, which makes this a tricky issue to address, according to the Commonwealth Fund.
- Some states — such as Colorado, Delaware, Florida, Illinois, Maine, Maryland, New York, Ohio, Vermont and West Virginia — have protections against surprise ground ambulance billing, a columnist in the Deseret News pointed out earlier this year.
- But in California, Florida, Colorado, Texas, Illinois, Washington state and Wisconsin, more than two-thirds of emergency ambulance rides included an out-of-network charge for ambulance-related services that posed a surprise bill risk in 2018, according to a Peterson-KFF Health System Tracker brief.
- The Biden administration has said it’s working on the problem.
The bottom line: Costs for ground ambulance care are on the rise and, with few balance billing protections, that means patients could still be hit with some big surprises if they wind up needing a ride in an ambulance.
Here in Washington, the conversation about politics is often framed as a spectrum, a straight line with poles at the end that are hard-wired opposites. Team Blue to the left and Team Red to the right. But in reality, the chatter might more accurately be framed as a loop, with the far ends bending back on themselves like a lasso. Eventually, the far-right voices and the far-left voices meet at the weird spot where Rand Paul supporters find common ground with The Squad.
It’s often at the knot between the two ends of that scale that we find some of the loudest voices on any given issue: foreign aid, vaccine mandates, the surveillance state. Right now, as Congress is considering a massive spending package on roads and bridges, pre-K and paid family leave, lawmakers have been debating a point on which political opponents agree: drug prices are too high.
Drug pricing is one of those rare sweet spots where it seems everyone in Washington can agree that consumers are getting a raw deal. The motives behind that sentiment differ, of course: liberals want to make medical care more accessible and to curb the power of big pharma, and conservatives see drug prices divorced from pure capitalism. But everyone can rally around the end goal. No one gets excited to tuck away pennies on the paycheck to control acid reflux or prevent migraines.
The package under consideration tries to fix drug costs by ending the ban on feds negotiating with pharmaceutical companies. In a deal hashed out among Democrats, Medicare would be allowed to negotiate directly with drug companies on the prices of the 10 most expensive drugs by 2025. That number would double to 20 drugs three years later. Only established drugs that have been on the market at least nine years in most cases would be eligible, giving pharmaceutical companies almost a decade of unrestricted profitability. (Start-up biotech companies would be exempted from the process under the guise of giving newcomer innovators a leg-up.)
For individuals on private insurance, their drug costs would be tied to inflation, meaning no spiking costs if a drug becomes popular. Seniors, meanwhile, would have a $2,000 cap on what they’d be responsible for at the pharmacy.
Democrats have been working for years to make drug companies the enemy. In the current environment of woke capitalism, they’re an easy target for lawmakers in Washington to come after. Drugs, after all, aren’t luxury goods. They’re necessary. And for the government to give them a pass in ways few other industries enjoy, that just seems wrong to the far-left wing of the Democratic Party that has flirted with elements of socialism.
It turns out, maybe that messaging isn’t working. New polling, provided exclusively to TIME from centrist think tank Third Way, suggests the way the conversation is framed matters more than you’d think. In a poll of 1,000 likely voters in September, costs were their biggest hangup about the healthcare system, regardless of political identity. Almost 40% of respondents cited healthcare costs as the biggest flaw in the system.
What didn’t seem to bother people much? Fairness. That’s right. The spot where the far-right and the far-left tines of the political fork meet is usually seen as an objection to a system rigged against the consumers. But a meager 18% of respondents to the Third Way poll say profits were what’s wrong with the system. Grievance isn’t the most grievous of problems.
And if you dig a little deeper, you find other reasons Democrats might want to reconsider how they talk about drug prices in the twin infrastructure plans parked in Congress. In fact, there’s a 12-point gap in two competing reasons to address healthcare; lowering costs draws the support of 72% of respondents while making things fair wins backing from 60%.
“This is kitchen table economics and it’s not a morality play,” says Jim Kessler, a co-founder of Third Way and its policy chief who is advising the Hill on messaging on the twin bills. “Those are winning messages, especially on healthcare. You’re going to keep the exact same system, but you’re going to get some help with costs.”
In other words, the chatter in the purple knot might feel most fulsome when talking about justice and weeding out the super-rich exploiters of capitalism. But, really, people just want to hold onto their cash. Protections against healthcare bankruptcy are super popular, suggesting the fear of losing everything to a hospital visit is real. Capitalism may well be exploitative but it’s tough to argue that a few extra bucks in the bank can make falling asleep easier at the end of the day.
So as Congress gets ready to move forward with drug prices in its infrastructure talks, lawmakers can find some comfort that the whole of the political spectrum agrees costs need to come down. And they don’t really care if it’s done in a fair way — as long as their savings doesn’t take a hit every 90 days.
Large majorities of American voters across all political stripes favor letting Medicare negotiate drug prices, and most don’t buy into the argument that high drug prices are needed for drug companies to invest in new research, according to a new poll from the Kaiser Family Foundation.
About 83% of all voters favor letting the federal government negotiate drug prices. Broken down by political ideology, that translates to 95% of Democrats, 82% of independents and 71% of Republicans.
About eight in 10 adults (83%) and adults 65 and older (78%) say they think the cost of prescription drugs is “unreasonable.”
WHAT’S THE IMPACT?
The Democrats’ budget reconciliation package includes a proposal to allow the federal government to negotiate prescription drug prices on behalf of Medicare beneficiaries and people enrolled in private plans. The proposal, which has been part of previous legislative proposals and estimated by the Congressional Budget Office to result in about $450 billion in savings to Medicare, has met strong opposition from the pharmaceutical industry, as well as some lawmakers.
Yet the proposal is largely popular among the public across parties, as well as among seniors, the group most directly impacted by such legislation.
The poll finds that when the public is presented with the main arguments being made by advocates on both sides of the debate, the shift in opinion is modest and support for negotiation remains high.
The argument against negotiation is that the government would be too involved, and would lead to fewer new drugs being available in the future. The argument for negotiation is that Americans pay higher prices than people in other countries, many can’t afford their prescriptions and drug company profits are too high.
After hearing the arguments for and against the proposal to allow the federal government to negotiate prices with drug companies, attitudes remained relatively unchanged with a majority continuing to favor the proposal.
Neither President Joe Biden nor members of either party in Congress have gained the full confidence of the public to do what’s right for the country on prescription drug pricing. Slightly less than half of the public say they have “a great deal” or “a fair amount” of confidence in President Biden (46%) or Democrats in Congress (48%) to recommend the right thing for the country on prescription drug prices.
One-third of the public (33%) say they have at least a fair amount of confidence in Republicans in Congress, and few are confident that pharmaceutical companies will recommend the right thing (14%).
THE LARGER TREND
In August, President Biden called on Congress to pass solutions to lower prescription drug prices and hold brand-name drug manufacturers accountable, and said Medicare should have the ability to negotiate lower drug prices.
The president called for Medicare to cap yearly out-of-pocket drug costs for beneficiaries, as well as backing Food and Drug Administration efforts to accelerate the development of generic medicines, which typically have far lower costs to consumers. The negotiation push was part of a $3.5 trillion budget proposal that narrowly passed the House in August.
This met with opposition from the Pharmaceutical Research and Manufacturers of America, which aired television ads saying the move to have Medicare negotiate drug prices would take away consumer choice.
PhRMA CEO and president Stephen Ubl said by statement after Biden’s August speech: “Unfortunately, the policies the president outlined today would undermine access to life-saving medicines and fail to address an insurance system that shifts the cost of treatments onto vulnerable patients. Many in Congress know that access to medicine is critical for millions of patients and Medicare is not a piggy bank to be raided to fund other, unrelated government programs. This is a misguided approach.”
Ubl was referring to HR 3, the Elijah Cummings lower Drug Costs Now Act, which would use the money saved in Part D negotiations to help offset the $3.5 trillion spending bill. HR 3 passed the House in 2019 but was never voted on by the Senate.
It wasn’t the first time Biden has proposed having Medicare negotiate drug prices. In May, Biden called on Congress to lower prescription drug prices as part of his administration’s Fiscal Year 2022 Budget. During a joint address to Congress in April, the president called for lawmakers to work toward bipartisan solutions to lower prescription drug prices, including giving Medicare the ability to negotiate.
Conservative and industry groups are trying to whip up opposition to President Biden’s massive social spending plan by warning it will imperil Medicare benefits, Axios has learned.
Why it matters: “Medicscare” is a well-worn political tactic precisely because it can be effective. For Democrats, there’s zero room for defections against the $3.5 trillion proposal if they want to pass the bill.
What’s happening: Senior citizens in Arizona, represented by Sen. Kyrsten Sinema (D-Ariz.), potential Democratic holdout, have started receiving large boxes labeled “Medical Shipment. Please open immediately.”
- Inside, they find an empty prescription drug bottle and literature warning of Democratic plans to “ration Medicare Part D.” That’s a reference to a budget reconciliation bill provision that would allow the government to negotiate Medicare reimbursement rates for prescription drugs.
- The mailers are the work of the Common Sense Leadership Fund, a Republican-aligned advocacy group. The mailers in Arizona specifically target Sen. Mark Kelly (D-Ariz.), who’s up for re-election next year.
- CSLF spokesman Colin Reed told Axios the group is mailing the packages to seniors and unaffiliated voters in Arizona and New Hampshire, where the group is targeting Sen. Maggie Hassan (D-N.H.), who’s also up for re-election.
Another nonprofit advocacy group, A Healthy Future, is targeting the prescription drug portions of the bill in a digital ad campaign aimed at key Democratic votes.
- The group has spent nearly $300,000 on Google, Facebook and Instagram ads aimed at Reps. Frank Pallone, Tom Malinowski and Andy Kim, all Democrats from New Jersey — where the drug industry has a huge economic footprint.
- “This is a prescription for disaster,” its ads say. They urge calls to Congress to “oppose cutting Medicare to pay for the $3.5 trillion spending plan.”
- It’s not clear who’s behind A Healthy Future — the group did not respond to inquiries from Axios — but its messaging on reconciliation and past policy fights track with drug industry priorities.
The big picture: Democrats have turned to drug pricing reforms to offset part of the legislation’s massive price tag, potentially paying for as much as $600 billion in new spending.
- That’s drawn intense opposition from the pharmaceutical industry — and lawmakers who enjoy the industry’s backing.
- If it’s included in the final version of the legislation, it could be a major sticking point for groups looking to peel off wobbly Democratic votes.
- Sinema has already said she opposes the effort.
Yes, but: The Mediscare tactic is larger than just the drug pricing fight. Americans for Prosperity, the Koch-backed conservative advocacy group, is running its own ads warning of much larger impending Medicare cuts.
- It says the spending bill’s efforts to expand Medicare will imperil the program itself.
- “Medicare is set to go bankrupt in about four years,” the ads claim. “Congress is acting irresponsibly and putting the program in jeopardy.”
- AFP’s ads have touched on drug pricing as well, which it’s dubbed “a 95% drug tax to fund $3.5 trillion in wasteful spending.”
About 73% of health insurance markets are highly concentrated, and in 46% of markets, one insurer had a share of 50% or more, a new report from the American Medical Association shows. The report comes a few months after President Joe Biden directed federal agencies to ramp up oversight of healthcare consolidation.
The majority of health insurance markets in the U.S. are highly concentrated, curbing competition, according to a report released by the American Medical Association.
For the report, researchers reviewed market share and market concentration data for the 50 states and District of Columbia, and each of the 384 metropolitan statistical areas in the country.
They found that 73% of the metropolitan statistical area-level payer markets were highly concentrated in 2020. In 91% of markets, at least one insurer had a market share of 30%, and in 46% of markets, one insurer had a share of 50% or more.
Further, the share of markets that are highly concentrated rose from 71% in 2014 to 73% last year. Of those markets that were not highly concentrated in 2014, 26% experienced an increase large enough to enter the category by 2020.
In terms of national-level market shares of the 10 largest U.S. health insurers, UnitedHealth Group comes out on top with the largest market share in both 2014 and 2020, reporting 16% and 15% market share, respectively. Anthem comes in second with shares of 13% in 2014 and 12% in 2020.
But the picture looks different when it comes to the market share of health insurers participating in the Affordable Care Act individual exchanges. In 2014, Anthem held the largest market share among the top 10 insurers on the exchanges, with a share of 14%. By 2020, Centene had taken the top spot, with a share of 18%, while Anthem had slipped to fifth place, with a share of just 4%.
Another key entrant into the top 10 list in 2020 was insurance technology company Oscar Health, with 3% of the market share in the exchanges at the national level.
“These [concentrated] markets are ripe for the exercise of health insurer market power, which harms consumers and providers of care,” the report authors wrote. “Our findings should prompt federal and state antitrust authorities to vigorously examine the competitive effects of proposed mergers involving health insurers.”
The payer industry hit back. In a statement provided to MedCity News, America’s Health Insurance Plans, a national payer association, said that Americans have many affordable choices for their coverage, pointing to the fact that CMS announced average premiums for Medicare Advantage plans will drop to $19 per month in 2022 from $21.22 this year.
“Health insurance providers are an advocate for Americans, fighting for lower prices and more choices for them,” said Kristine Grow, senior vice president of communications at America’s Health Insurance Plans, in an email. “We negotiate lower prices with doctors, hospitals and drug companies, and consumers benefit from lower premiums as a result.”
Further, the report does not mention the provider consolidation that also contributes to higher healthcare prices. Mergers and acquisitions among hospitals and health systems have continued steadily over the past decade, remaining relatively impervious to even the Covid-19 pandemic.
Scrutiny around consolidation in the healthcare industry may grow. In July, President Joe Biden issued an executive order urging federal agencies to review and revise their merger guidelines through the lens of preventing patient harm.
The Federal Trade Commission has already said that healthcare businesses will be one of its priority targets for antitrust enforcement actions.