“but in most cases it requires gov’t intervention to intervene to restore competition. This is anathema to most conservatives today.”

MG I think you have this flipped, its government intervention that creates non functioning markets not the other way around. Can you name any examples to support your claim?

Lets look at a few markets that have never been over regualted by government;

Hamburgers or Fast food in general
Plumbing, AC, electrical or any of your skilled trades
Car Repair
etc etc

Now if you look at industries broken up by the government this supposed anathema to conservatives it was actually government that created it in the first place

Telephone
Departure gates for airlines
Trash Hauling
Cable TV

If you have any examples to support your argument I would like to reserach them but I can’t think of any time it has happened

They would also regulate how much sodium you intake, how many sodas your drink, what you fry your food in, and anything else they could even remotely related to or affecting health.

” may have the reasons why. In any event, weak price controls are not a fact of nature–just a fact in America.”

Price controls limit supply, as a freeer, enough E’s, market then those you mention we let the market decide price not central planning. This actually works better in some cases then central planning, i.e. generics. Its when we pretend to have a free market but regualte the heck out of it that we get some really inflated prices.

1. It may be time for a debate on the scope of public health.

Almost all factions would agree that public health should include contagious diseases, plus emergency care for broken bones, infections,
and life-threatening conditions such as stroke, heart blockages, impacted bowels, septic shock, etc.

But conservatives tend to stop here. (Avik Roy stated this well on one of his blogs last year.)

Liberals would in general expand public health to include self-contained,
long-gestating chronic diseases such as diabetes and high blood pressure, and catching cancers early when possible. (Arnold Kling calls this ‘premum medicine.’)

An honest conservative (such as Kling or Nate Ogden) would say that if chronic diseases are untreated and life expectancy goes down a couple of years, well, that is not a national tragedy. The conservative view is that government has no duty to prevent all deaths. A conservative would state that diabetes is not a public health problem. (and by the standards of America from 1789 to about 1970, it is not.)

This debate is muddled, of course, by Republican hypocrites –who expect seniors on Medicare to get premium medicine without question, but would deny it to anyone under 65 without a good job or money.

The debate on public health must also deal with the research on over-treatment and over-diagnosis for a number of common conditions. There are far more urgent public spending needs than preventing five thousand early deaths from a cancer, by testing absolutely everyone.

At any rate, it would not hurt to drive the debate on the proper scope of public health.

2. My second comment for Jeff refers to his point that price controls are always captured by powerful players.

This is true for the USA but it does not appear true at all for Germany, Japan, and France, just to mention three large countries.
Regulators in those places have pushed back big pharma many times.
Canada took a strike of doctors over its initial single-payor plan, and the doctors lost.

Someone like Paul Starr may have the reasons why. In any event, weak price controls are not a fact of nature–just a fact in America.

Bob Hertz – The Health Care Crusade

All or none contracting is exactly what the powerful hospitals insist on now. This includes large systems with multiple hospitals that refuse to let insurers contract with some of their hospitals but not others and even try to resist tiering which strikes me as particularly obscene. Why should a hospital be able to get away with telling an insurer that it can’t charge its own members a higher co-pay than the member would pay to go to a competitor’s hospital? This is another area that probably has to be dealt with via regulation, along with the pricing of care delivered under emergency conditions where the choice of hospital is not possible or practical.

If I remember correctly, according to the large for profit hospital chain, HCA, about 70% of its inpatient revenue is from medical care and only 30% is for surgical care. Quality differences on the medical side probably relate more to differences in infection rates and readmission rates which are often completely uncorrelated with market power. In the case of cancer treatment, I’m told that as much as 80% of it can be dealt with perfectly well in a community hospital setting. People don’t need to go to Memorial Sloan-Kettering or M.D. Anderson for every cancer and, if they do, they are most likely to receive a full court press whether they want it or not because that’s the culture at those institutions.

Barry,
Why would a Center of Excellence agree to be put in a special tier by the insurer and give up its bread and butter so to speak?
If I was running on of those, I would tell the insurer that it’s all or nothing, and if I was big enough and excellent enough, it would be all, I presume.

I don’t know how much difference there is geographically in the price actually collected per procedure nor do I know whether there is any correlation between the number of insurers and medical prices. I do know that within a given market, a dominant insurer will pay less than competitors with a much smaller market share.

Regarding the growth rate of medical costs, I think it is driven by such trends as advances in technology, including new cancer drugs, the aging of the population, secular upward creep in coding intensity, and, of course, the increase in the price of services, tests, procedures and drugs.

My preferred way to build countervailing power against powerful hospitals and large physician groups is the use of tiered networks and limited or narrow networks. If we can demonstrate to the patient that, for most care, the high priced hospitals are no better than their less well paid competitors, it’s legitimate for payers to require the member to share more of the cost to access the high cost, comparable quality provider. For procedures for which the high priced hospitals have earned a Center of Excellence designation, payers could put them in the preferred tier for those. As both employers and people who buy their insurance in the individual market perceive health insurance as increasingly unaffordable, tiered network and narrow network products are finally starting to gain more traction in the marketplace and it’s about time. As I’ve said many times, easy to use price and quality transparency tools are necessary to make this all work as well as it can for both patients and referring doctors.

Separately, I’ve never heard that PA insurers pay full charges. Why would they do that? My own insurance is with Highmark Blue Cross but I live in NJ and most of my doctors are in NYC near my work. Payment rates are determined by the local Blue (Empire in NY and Horizon in NJ) and Highmark then pays that contract rate under its Blue Card system.

This is the myth of the free market in many industries/aspects. The end point of a mature and long-existing market place is a marketplace dominated by a single company/entity or a small handful of companies/entities that will use their position, clout, and leverage to ensure that position remains unchallenged. Now maybe their stranglehold is ended through some market force (substitution, etc) but in most cases it requires gov’t intervention to intervene to restore competition. This is anathema to most conservatives today.

Yes, I know about the cooperatives. I think Premier Inc. is the largest, but I’m not sure if member hospitals use it to purchase expensive devices or not as that’s a decision driven mainly by surgeons at each hospital, I believe.

As for the ACO’s, I’m not familiar with the intricacies of the regulations though much of the provider feedback seems to be negative so far. In theory, assuming they have sufficient critical mass and interoperable electronic records systems, they should be able to achieve some cost savings in care coordination, especially through the elimination or reduction of duplicate testing and adverse drug interactions.

If ACO’s were willing to assume the financial risk inherent in capitated payments and if there were at least two in each urban and suburban market to compete for business, there is potential to improve upon the status quo. Payments would need to be risk adjusted and the risk adjustment state of the art isn’t where it needs to be yet, in my opinion. The existing system still overpays for the healthy and underpays for the sick.

The closest thing we have to a large scale ACO today is Kaiser but their insurance premiums are not much lower than their competitors’. I don’t know, however, to what extent that is due to a different membership mix – older and/or sicker than competitors’ insured populations. If we wind up with very large ACO’s in many markets, it could indeed lead to even greater concentration of market power than we have now so even capitated payments, if driven high enough by near monopoly market power, could result in healthcare costs even greater than they are now under fee for service payment.

At the end of the day, I’m not very optimistic about the ACO concept’s ability to drive medical cost growth lower. There could be some quality improvements, though. As I’ve said before, to really attack costs, we need to stop paying for services, tests, procedures and drugs that either don’t work or cost more than they’re worth. We need meaningful tort reform to reduce defensive medicine over time. We need a more sensible approach to end of life care and we need good, user friendly price and quality transparency tools. We also need more reasonable and realistic patient expectations than we have today. If all that fails, we will probably eventually wind up with explicit rationing, most likely age based.