• More on prices

    You should read Jeff Levin-Scherz’s blog. Austin’s post on Uwe Reinhardt’s rate setting paper and subsequent banter made this figure from a recent post from Jeff stand out:

    This graph (and other similar ones) show that increases in prices have been the primary driver of health care cost increases in Massachusetts (hospital inpatient care shown here).  Full report of the Special Commission on Provider Price Reform. On a related note, higher prices are the primary reason the U.S. spends so much more on health care than do other nations. As Uwe Reinhardt once said “its the prices stupid.”

    update: fixed typo.

    • Can anyone else see the connection between this post and the earlier one about US trade proposals that seem to making the (high) prices Pharma gets to charge in the US the standard for the rest of the world? It’s shameful that the Obama Administration’s answer to high spending on health care in the US seems to be to drive up drug prices in the rest of the world.

      If we continue to pay more for specialist MD treatments, hospital stays, drugs and other components of health care than other developed countries, the cost curve will never be brought under control. The payers’ cost increases are always the flip side of the providers’ revenue increases.

    • Money quote from the report:

      “Community health center representatives stated that the effects of price variation have significantly impeded their ability to attract and retain physicians.”

      Or – “Thanks and best regards, Massachussetts…and hello Texas.”

      -I can vividly recall speaking with a married MD couple just shy of completing their respective residencies and listening to them explain that they were preparing to leave Boston, and fast, since they didn’t think they’d be be able to make a go of it there financially. Imposing price caps that are substantially below what physicians can make elsewhere will probably work on older MD’s with established practices and entrenched personal commitments, but good luck getting all but the most zealous academic types to stick around for their helping of austerity.

    • Isn’t that kind of like saying water is wet? Why are the prices so high?

      • @buermann
        I think the main point is that it is not changes in utilization, or different risk profile (obesity,etc.) driving increases. Why the prices are so high would seem to be because providers can get higher prices. Then the question is how can you moderate prices?