• More on Mass. health insurance rates

    Robert Weisman and Todd Wallack report in today’s Boston Globe:

    The three-month dispute has pitted insurers who insist the cap is forcing them to lose tens of millions of dollars against state government leaders who contend soaring rates are crippling small companies and working families. It is also intensifying pressure on both insurers and state officials to rein in the rising costs of doctors visits and hospital procedures charged by Massachusetts health care providers.

    Regulators say they won’t back off from continuing to challenge rate hikes they consider excessive. But as part of a stepped-up review of rate requests, they now will take a closer look at what insurers pay different providers, Barbara Anthony, state undersecretary of consumer affairs and business regulation, said yesterday. One question they will ask, she said, is “Why are carriers paying one hospital $500 and another hospital $1,500 for an MRI?’’

    We know why carriers pay hospitals different prices for the same services. It’s called market power. The real question is what are regulators and legislators willing to do about it?

    • Has anyone looked at the issue of market power in the context of rural vs urban providers? Most of the cases I have seen cited seem to identify large urban facilities, often university affiliated, as market powers. I would think that isolated, rural hospitals would have the same negotiating power, yet my experience would indicate that it seldom works that way.


      • @steve – Yes, there’s some literature that relates to that. The typical explanation for why Medicare HMOs don’t enter rural regions is due to the market power of low density providers, including hospitals.

    • I have been struggling for some time – since I read the line – with what you mean by…

      “The real question is what are regulators and legislators willing do about it?”

      My struggles are around a couple of things…
      1. Should they do something about “it”?
      2. Can they do something about “it”?
      3. How do we assure that the what they do about “it” is effective?

      And this confusion is grounded in my underlying question – “Why does the US have so many MRI machines?”

      I think the answer to my underlying question leads to a solution to the problem far easier and far more effective in lowering health care costs than dealing with it at the level you suggest.

      • @LL – No doubt you misunderstand. One has to distinguish between (a) advocacy of action at all and (b) advocacy of particular politically viable action given there will be some. I believe regulators and policymakers will act, at a local and national level. In fact, the gears of government are already turning, and always will. Therefore, how might they be nudged–for that is the most someone like me can do, if anything–toward something modestly better and more effective in some sense yet still within the realm of the politically possible. Much of what passes as health system policy recommendations from “the outside” are pie-in-the-sky dreams of a utopia that will not exist. I don’t bother with that since it’s well represented elsewhere.

        So, it’s an honest questions, what will they do about it?

    • You are right – I misunderstood – I thought you were suggesting that regulators and legislators needed to do something about “market power” – something that would appear to be more in the “pie-in-the-sky” realm…