If hospitals get federal money for anything they will be required to accept insurance offered on the exchange that meet some minimum qualification. At least the two that were blessed as the national options.
Or insurance companies will be required to put an offering on the exchange...likely both.
Like the states refusing to expand Medicaid and set up their exchanges, the hospitals are hastening the transition to a single payer healthcare system by refusing to play ball.
Sometimes I wonder if some genius "systems thinkers" in Washington planned that out as the end game all along. Add in the factor that some states have almost no hospitals, thus the insurance companies have no leverage to lower premiums, which leads to why certain states have very high ACA premiums. Theoretically the free market says that another hospital would pop up to compete on price, but theory ain't practice...
The insurance companies supported and lobbied for the ACA -- which was the only reason it barely passed -- because they thought they were getting a gigantic payday from the employer mandate. With that gone they're doing their best to either kill the law or perhaps lean on it hard enough to get vastly broader subsidies to make it worth their while.
The 11-dimensional chess idea that passing a law to destroy the individual insurance market is going to bank-shot into single payer would require an absolutely massive outbreak of corporate and public support that really doesn't have any reason to appear.
> Theoretically the free market says that another hospital would pop up to compete on price, but theory ain't practice
It is illegal to start a new hospital to compete on price with the existing ones. To open a new hospital, you need permission from the current existing hospitals. If they don't agree that the community you want to do business in is "underserved", you can't get licensed.
And yes, that policy is insane, moronic, a source of monopoly rents and probably one of the many reasons health care costs are so out of control. But it's the law.
Wow. That is the best example of regulatory capture I've ever seen.
I love the rationalization: "If there are too many hospitals many hospitals and doctors my recommend unnecessary hospitalization or overcharge existing patients to cover their overhead".
The standard for "Burn Unit" says there can't be more than one burn unit bed for every 225,000 persons and you can't build a new unit unless all the existing ones in the area have >70% annual utilization. So what if your new unit might be MUCH CHEAPER or merely more competent than the current players? Nope. The government isn't allowed to take mere PRICE into consideration in deciding if you can go into business. Or competence, or anything other than expected "need". And your new unit has to have at least 12 beds - operating at a smaller scale than that is apparently illegal.
Then the standard for "long term care" facilities says they aren't allowed to plan on using any spare capacity to provide services such as "advanced emergency care". Why not? Because that might lead to "unnecessary duplication". Ugh.
The wikipedia page says that it is the state health agencies that determine need. It doesn't say that the surrounding hospitals have to agree or give permission. Do you have a source on that?
If there's any contention at all, the state health agencies typically "determine need" by holding a hearing which gives an opportunity for "the people in the community" to weigh in.
The way that works in practice is that at the hearing any hospitals in the surrounding area that care to do so will have someone show up to testify that it would hurt their business (and is "unneeded") to let a new place be built or expand near their area. The agency doesn't HAVE to take their word for it but in practice tends to do so - after the hearing, a committee that heard one voice FOR the new place and five or ten voices OPPOSED to it decides that "based on the weight of the testimony heard" there's no need for the new place. Unless a new lower-priced competitor can somehow generate the impression of a huge groundswell of support for the value of something new that hasn't even been built yet and thus can't sensibly be judged - in the face of really well-funded opposition - it never gets the chance to compete. So in practice, the status quo operations have a veto, even if the law doesn't explicitly say that.
Here's an example of an existing hospital requesting a need hearing so they can make their case to stop a potential competitor from getting some of their business:
In most private sector businesses, if I think I can run you out of business by selling a lower priced product next door, I can just go ahead and DO that. There's no hearing at which you get to testify that there's insufficient NEED for my new restaurant/auto repair shop/what-have-you and thereby deny me a permit to build. Health care is special that way. In essence, hospitals belong to a government-maintained cartel.
UPDATE: in some states there do exist "objective standards" for what constitutes need...but it seems like what really matters is whether your Certificate Of Need application is UNCONTESTED (and might just sail right through committee) or is CONTESTED (so there's a hearing in which a bunch of lawyers challenge your right to compete - and probably find against you). Where there exist official standards determining how much supply is allowed in a given area, they tend look kind of like the documents here:
http://www.tennessee.gov/hsda/con_standards.shtml
Note that if you use those exact standards, starting a new hospital in order to undercut existing ones and drive them out of business due to your better/cheaper service is basically impossible. For instance, you can't start or expand a long-term care facility unless ALL the other facilities in your area have >85% annual bed utilization.
A few, like No. 1-rated Johns Hopkins in Maryland, are mandated under state law to accept all insurance companies
That sounds like a totally sane statutory requirement. Why don't more states have it? Collusion between hospital chains and insurers is the crux of the health care cost problem in the US.
But that kind of policy will eventually backfire, since doctors are free to move to whatever state they want once they finish their residencies. If Maryland forces them to accept insurance that doesn't reimburse them at a rate that they find acceptable, they'll go work in another state and Maryland will have a shortage of doctors. And doctors who are already practicing in Maryland will retire early or move into research, or some other job that doesn't involve seeing patients (like consulting for medical software companies).
Okay. So we write the check to IBM to improve/license Watson for all of Medicare to use. If doctor's won't accept the payments available, automate what we can, and provide more training to nurses to enable them to fill in.
Yes, I'm advocating for the replacement of doctors in the vast majority of cases. They're like college professors who spend most of their time doing research, while the TAs (Nurses in this case) do all the heavy lifting. Empower the nurses, replace the doctors.
Lots of companies that are required to do business with each other (eg. utilities and the rest of the private sector or large retailers and large consumer goods companies) are able to do it, why would a statutory requirement be any different?
I'm guessing current laws were written around the "managed care" (HMO/PPO) system, the previous (70s-90s) attempt at healthcare reform.
For that one, the theory was that the payment/administration bureaucracy was the cause of the health care cost problem, and that by having insurance companies buy hospital service in bulk rather than doing individual-service billing the overhead could be reduced and accountability would be increased. This requires insurers to be able to assign customers to hospitals and doctors that work for them for it to work.
I'm sort of confused by how authorship works in the US News & World Report generally, and clicking around a bit on the site doesn't clarify it. Do they have professional staff reporters? Is it just reblogging stuff from elsewhere? Are they buying freelance pieces? Is it like Forbes where there's a "Forbes proper" and an "anybody can blog on Forbes.com here" section (and if so, how do I tell which is which)? I can't really sort out what the intended semantics are for an article published on usnews.com but with a byline of another website.
Seems confusing, but in any case, letting outside lobbying groups run news articles in their pages, not marked as either contributed op-eds or paid messages, is a bit weird.
27 comments
[ 2.5 ms ] story [ 66.5 ms ] threadIf hospitals get federal money for anything they will be required to accept insurance offered on the exchange that meet some minimum qualification. At least the two that were blessed as the national options.
Or insurance companies will be required to put an offering on the exchange...likely both.
Like the states refusing to expand Medicaid and set up their exchanges, the hospitals are hastening the transition to a single payer healthcare system by refusing to play ball.
The 11-dimensional chess idea that passing a law to destroy the individual insurance market is going to bank-shot into single payer would require an absolutely massive outbreak of corporate and public support that really doesn't have any reason to appear.
Limit the moves:
Profit is capped. Now profit can only grow through growth in a market that is, by law, fully saturated. That means mergers.
Once the field is winnowed down to a few players, government can cry 'monopoly' and regulate it until it is government run in all but name.
It is illegal to start a new hospital to compete on price with the existing ones. To open a new hospital, you need permission from the current existing hospitals. If they don't agree that the community you want to do business in is "underserved", you can't get licensed.
And yes, that policy is insane, moronic, a source of monopoly rents and probably one of the many reasons health care costs are so out of control. But it's the law.
https://en.wikipedia.org/wiki/Certificate_of_need
I love the rationalization: "If there are too many hospitals many hospitals and doctors my recommend unnecessary hospitalization or overcharge existing patients to cover their overhead".
Amazing.
http://www.tennessee.gov/hsda/con_standards.shtml
The standard for "Burn Unit" says there can't be more than one burn unit bed for every 225,000 persons and you can't build a new unit unless all the existing ones in the area have >70% annual utilization. So what if your new unit might be MUCH CHEAPER or merely more competent than the current players? Nope. The government isn't allowed to take mere PRICE into consideration in deciding if you can go into business. Or competence, or anything other than expected "need". And your new unit has to have at least 12 beds - operating at a smaller scale than that is apparently illegal.
Then the standard for "long term care" facilities says they aren't allowed to plan on using any spare capacity to provide services such as "advanced emergency care". Why not? Because that might lead to "unnecessary duplication". Ugh.
The way that works in practice is that at the hearing any hospitals in the surrounding area that care to do so will have someone show up to testify that it would hurt their business (and is "unneeded") to let a new place be built or expand near their area. The agency doesn't HAVE to take their word for it but in practice tends to do so - after the hearing, a committee that heard one voice FOR the new place and five or ten voices OPPOSED to it decides that "based on the weight of the testimony heard" there's no need for the new place. Unless a new lower-priced competitor can somehow generate the impression of a huge groundswell of support for the value of something new that hasn't even been built yet and thus can't sensibly be judged - in the face of really well-funded opposition - it never gets the chance to compete. So in practice, the status quo operations have a veto, even if the law doesn't explicitly say that.
Here's an example of an existing hospital requesting a need hearing so they can make their case to stop a potential competitor from getting some of their business:
http://wvuhealthcare.com/wvuh/Content/Media/News-Releases/20...
And here's an FAQ/description of the hearings:
http://www.doh.wa.gov/LicensesPermitsandCertificates/Facilit...
In most private sector businesses, if I think I can run you out of business by selling a lower priced product next door, I can just go ahead and DO that. There's no hearing at which you get to testify that there's insufficient NEED for my new restaurant/auto repair shop/what-have-you and thereby deny me a permit to build. Health care is special that way. In essence, hospitals belong to a government-maintained cartel.
UPDATE: in some states there do exist "objective standards" for what constitutes need...but it seems like what really matters is whether your Certificate Of Need application is UNCONTESTED (and might just sail right through committee) or is CONTESTED (so there's a hearing in which a bunch of lawyers challenge your right to compete - and probably find against you). Where there exist official standards determining how much supply is allowed in a given area, they tend look kind of like the documents here: http://www.tennessee.gov/hsda/con_standards.shtml
Note that if you use those exact standards, starting a new hospital in order to undercut existing ones and drive them out of business due to your better/cheaper service is basically impossible. For instance, you can't start or expand a long-term care facility unless ALL the other facilities in your area have >85% annual bed utilization.
That sounds like a totally sane statutory requirement. Why don't more states have it? Collusion between hospital chains and insurers is the crux of the health care cost problem in the US.
Like Medicare.
Yes, I'm advocating for the replacement of doctors in the vast majority of cases. They're like college professors who spend most of their time doing research, while the TAs (Nurses in this case) do all the heavy lifting. Empower the nurses, replace the doctors.
http://www.intuitivesurgical.com/
For that one, the theory was that the payment/administration bureaucracy was the cause of the health care cost problem, and that by having insurance companies buy hospital service in bulk rather than doing individual-service billing the overhead could be reduced and accountability would be increased. This requires insurers to be able to assign customers to hospitals and doctors that work for them for it to work.
Seems confusing, but in any case, letting outside lobbying groups run news articles in their pages, not marked as either contributed op-eds or paid messages, is a bit weird.