Another issue of Health Affairs has arrived. (HA Issue) The first article discusses contract negotiations between health plans and hospital systems. Pretty routinely every year large hospital systems threaten to leave a health plan’s network if they don’t get a huge price increase. This is due to market power from excessive concentration. It is a key cause for high health spending.
The second article looks at provider prices negotiated with provider-owned health plans. These plans use their common ownership with providers to charge lower prices for their services. Not clear that the premiums are any lower, they probably aren’t. What is going on here is that primarily large health systems are willing to take a lower price on health services, assuming they will make it up in health plan membership gains and profits. If some providers are willing to take a lower price for these provider-owned plans, then why can’t they charge the same price to all plans?
US health spending grew more slowly in 2014-2019 and another study analyzes why this occurred. Utilization reductions and shifting care to less expensive sites of care, for example, surgicenters instead of inpatient surgery units, appears to have led to some of the slower growth. Disease burden did not decline, nor did price growth. In other words, spending growth, while slower, was still largely due to prices.
Another study looked at spending growth at the large Blue Cross plan in Massachusetts. Here the volume and intensity of services, which is more services delivered per episode of care, were a primary driver, although in the most recent years, price is a major factor.
The next article examines net drug prices after a generic becomes available. Generics obviously have a much lower price than the brand-name drug did. Total spending fell, and the brand name drug actually raised prices to compensate in part for the loss of volume.
States with Medicaid programs were often able to negotiate even bigger rebates from drug makers than those offered on a national basis. Gives you a sense of how profitable drugs are that the makers can accept big discounts.
Ideas to reform Medicare Advantage are explored in another article. And then we get several of the usual DIE-based articles. Finally, an examination of care patterns for dementia from different types of clinicians.
