• How many plans do we need on an exchange? Ask Marty Gaynor

    Marty Gaynor held office hours on Twitter (@MartinSGaynor) this afternoon to address this question. Here’s a screenshot of his tweets. (Read from bottom up.)

    gaynor twitter

    Here are those references:

    UPDATE: Apparently, Gaynor wasn’t done.

    more gaynor twitter

    Maybe he’ll keep going. You can scan his Twitter feed to find out.


    • I think this is the most useful twitter has ever been for, ya know, useful things.

    • I just can’t believe that people use twitter for anything more complex than “I just had lunch”.
      I tried to understand this thread but it is just gibberish.
      Is he too lazy to write a complete paragraph?

    • I wonder if structure makes HMO/ACO competitiveness difficult. If the HMO doesn’t have an own hospital, it has to buy fee-for-service from local hospitals. Yet, if it does, the number of HMOs are limited by the number of hospitals that can serve the area. And the fact that in districts with lots of hospitals, people want the assurance that if they really need it, they can go to the best.

    • As to the substantive question, Matthew Yglesias had a counter-intuitive post a week or two ago: that too much competition in the exchanges will result in an overall increase in health care costs and premiums as the insurers compete with each other by negotiating higher reimbursement rates with the providers to recruit the “best” providers for their plan and thereby draw more insureds to the plan based on quality of services. It’s true that reimbursement rates of a single insurer vary widely among providers, in part due to the market power (by size, reputation, etc.) of certain providers. Indeed, much of my time representing physicians is devoted to chasing higher reimbursement rates by, for example, consolidating medical practices or affiliating with another provider that will distinguish one practice from another (by, for example, affiliating with a hospital or with a well-known medical clinic such as a research center). Much is made of the inefficiencies of physician practices as the result of fragmentation (many single and small group practices), and ACA, at least in part, is intended to reduce the fragmentation by encouraging consolidation and integration. But, of course, that should increase the bargaining power of the larger and distinguishable groups, thereby increasing reimbursement rates and premiums. On the other hand, we are becoming more aware that the “efficient markets hypothesis” does not apply to the health care industry. An interesting question is whether the exchanges will serve the function of a “market” (e.g., stock exchanges), and provide the public information that is necessary for an efficient market to operate. If it does, then presumably there will be one reimbursement rate for every service (i.e., the market rate) and overall health care costs and premiums will be at their competitive lowest. That would be something to twitter about!

      • Indeed. Yglesias’s post was on a theme well-covered on this blog, though years ago. See also: http://nihcm.org/pdf/EV_Frakt_FINAL.pdf

        • Good summary of hospital vs. insurer concentration and effect on pricing. My comment, though, addresses a different question, namely, whether the exchanges will provide sufficient transparency to subject health care pricing to the efficient markets hypothesis; and if it does, will it ultimately lead to a single price for items and services (I.e., the competitive market price). Yglesias is suggesting the opposite. As for ACOs, which you address in the 2010 post you reference, what’s actually happening is that hospitals are integrating (i.e., acquiring) physician practices and employing physicians to create networks, so ACOs aren’t necessary. Indeed, we recently crossed the threshold where more than 50 percent of physicians are employed by hospitals. Of course, this changes the legal framework under anti-trust laws.