Jump to content
Washington Football Team Logo
Extremeskins

Obamacare...(new title): GOP DEATH PLAN: Don-Ryan's Express


Recommended Posts

I don't know. A lot will depend on how much utilization there is. For example, if we cover colon screenings, it might be cheaper for patient x because it keeps him from battling an expensive cancer by catching it early. However if catching it lets him live 10 years more, that is 10 more years to rack up medical costs before eventually falling prey to some other expensive malady. It might be cheaper for a given time span, but ultimately nothing is free.

 

It really comes down to how much will we pay otherwise, and what kind of care will we get for it. Currently, we pay the most in the world per person for our care. Despite this, we are from first on most objective measurements. Easy to say we are fat lazy people so no shock we spend a lot on heart meds and treatments to die early. So maybe lifespan isnt the best measurement. However, the number of women and children dieing in child birth in the U.S. is an embarassment, even if one doesn't look at the stats by race.  (Black women die a lot more than White).

 

Universal healthcare remains expensive until we as a culture address some of the expensive issues. How much should we pay for end of life care? How can we provide relatively safe births for a reasonable cost? What can and should we do to take care of the sick particularly those with chronic  expensive to treat illnesses. In the U.S. we have a hard time dealing with the beginning and ending of life. Until we can square these ideas with what we are willing to spend, we will have conflicts...and maybe we should.

Link to post
Share on other sites
  • 3 weeks later...

Millennials 'are seeing their health decline faster' than Gen X, worrying experts

 

The declining health of the millennial generation could have a serious impact on the U.S. health care system, according to experts.

 

“Millennials are seeing their health decline faster than the previous generation as they age,” a Moody’s Analytics report analyzing Blue Cross Blue Shield Health Index data stated. “Without intervention, millennials could feasibly see mortality rates climb up by more than 40% compared to Gen-Xers at the same age.” (Pew Research defines millennials as Americans born between 1981 and 1996.)

 

These declines will lead to greater demand for treatment, which could have a serious financial impact on the cost of health care.

 

“Under the most adverse scenario, millennial treatment costs are projected to be as much as 33% higher than Gen-Xers experienced at a comparable age,” the report stated. “Poorer health among millennials will keep them from contributing as much to the economy as they otherwise would, manifesting itself through higher unemployment and slower income growth.”

 

The report stated that this “has the potential to tax our already burdened healthcare infrastructure. The U.S. already spends more than 18% of its GDP on healthcare expenditures, the highest in the developed world. These additional cost pressures would be borne not only by consumers and businesses, but by states and the federal government as well, adding to already mounting mandatory spending burdens.”

 

In 2017, U.S. health care spending grew 3.9%, reaching $3.5 trillion or $10,739 per person, according to the Centers for Medicare and Medicaid Services (CMS). That accounted for about 17.9% of the nation’s GDP.

 

As they continue getting sicker, the oldest millennials could see their incomes decline by as much as $4,500 per person by 2027 under the most extreme scenario, according to the report.

 

Millennials account for the largest share of the U.S. population and the largest share of the U.S. labor market. A sicker workforce means more and more people missing work, or stopping altogether. Based on the Moody’s findings, the labor force participation rate is projected to decline over the next decade.

 

Click on the link for the full article

Link to post
Share on other sites
  • 2 weeks later...
1 hour ago, bearrock said:

As for elasticity of demand, yes, we see elasticity in certain types of healthcare segment such as prescription drugs, diagnostic scans, and specialists, where people have time and resources to compare and shop around.  But elasticity is essentially nil when it comes to preventative care and emergency care (obviously because people care more about the doctor than cost when it comes to primary care and no one is looking up whether that hospital 10 minutes further away may have cheaper triage fee).  

 

The link to the Stanford article specifically looks at doctors.

 

And studies over a period of years also show that consolidation seems to drive DOWN quality so the idea that the difference is changes in quality seems unlikely.  (That quality goes down with consolidation was also reasonable if the health care market is pretty elastic.)

 

https://www.nber.org/papers/w12301

https://www.nytimes.com/2019/02/11/upshot/hospital-mergers-hurt-health-care-quality.html

 

While I don't know a single study that has looked at everything together that prices are going up because quality is going up explanation doesn't jive with the idea that separate studies are showing that consolidation is driving up prices and down qualities.

 

We aren't talking about a few studies over a few years.  Studies over 5+ years have pretty consistently shown consolidation drives up prices and down quality.  The health care market seems like it was more elastic (more controlled by supply and demand) than people anticipated.

 

(I guess in the specific WV case it is possible, but in general it seems very unlikely.)

 

I think you are also underplaying the role of vertical monopolies and integration.  Consolidation happens not just horizontally, but vertically as hospitals get larger, which can affect primary care physicians (PCPs), meaning preventative care.  And there are also studies that show more expensive PCPs aren't significantly tied to be better health out comes.  So again the idea that higher prices are tied to better quality doesn't seem to jive with combinations of studies.

 

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2018.0472 (5% increase in PCP prices tied to consolidation, and I'm pretty sure I've seen studies that put an even larger number on it especially when you take into account tests, labs, etc. (who cares where they get their labs done?)).

 

Emergency care I'm not sure about (to my knowledge no studies have been done), but if competition affects prices at every other level of care, it certainly seems like it could affecting emergency care too.

 

Can there be price pressure even if patients don't/can't shop around (much)?  If you know a hospital a few miles away is offering lower emergency medical care prices does that cause your prices to go down?

Edited by PeterMP
Link to post
Share on other sites
18 minutes ago, PeterMP said:

 

The link to the Stanford article specifically looks at doctors.

 

And studies over a period of years also show that consolidation seems to drive DOWN quality so the idea that the difference is changes in quality seems unlikely.  (That quality goes down with consolidation was also reasonable if the health care market is pretty elastic.)

 

https://www.nber.org/papers/w12301

https://www.nytimes.com/2019/02/11/upshot/hospital-mergers-hurt-health-care-quality.html

 

While I don't know a single study that has looked at everything together that prices are going up because quality is going up explanation doesn't jive with the idea that separate studies are showing that consolidation is driving up prices and down qualities.

 

We aren't talking about a few studies over a few years.  Studies over 5+ years have pretty consistently shown consolidation drives up prices and down quality.  The health care market seems like it was more elastic (more controlled by supply and demand) than people anticipated.

 

(I guess in the specific WV case it is possible, but in general it seems very unlikely.)

 

I think you are also underplaying the role of vertical monopolies and integration.  Consolidation happens not just horizontally, but vertically as hospitals get larger, which can affect primary care physicians (PCPs), meaning preventative care.  And there are also studies that show more expensive PCPs aren't significantly tied to be better health out comes.  So again the idea that higher prices are tied to better quality doesn't seem to jive with combinations of studies.

 

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2018.0472 (5% increase in PCP prices tied to consolidation, and I'm pretty sure I've seen studies that put an even larger number on it especially when you take into account tests, labs, etc. (who cares where they get their labs done?)).

 

Emergency care I'm not sure about (to my knowledge no studies have been done), but if competition affects prices at every other level of care, it certainly seems like it could affecting emergency care too.

 

Can there be price pressure even if patients don't/can't shop around (much)?  If you know a hospital a few miles away is offering lower emergency medical care prices does that cause your prices to go down?

 

If consolidations are driving down quality, then I would view that more as consolidation gone wrong then an inherent flaw in consolidation itself (now that may be different if we can copy the UK system where government fixes the price and PCPs are mandated to give five referrals to patients and couple that with easily accessible metrics on patient outcome).  The reason I don't view that as inherent flaw in consolidation is because institutions widely acknowledged in this country as top in it's field are all major health systems.  

 

As to elasticity, this is the study:

 

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5600717/

 

Quote

Using 171 million person-months spanning 73 employers from 2008–2014, we estimate that the overall demand elasticity by backward myopic consumers is −0.44, with high elasticities of demand for pharmaceuticals (−0.44), specialists visits (−0.32), MRIs (−0.29) and mental health/substance abuse (−0.26), and lower elasticities for prevention visits (−0.02), and emergency rooms (−0.04). Demand response is lower for children, in larger firms, among hourly waged employees, and for sicker people. Overall the method appears promising for estimating elasticities for highly disaggregated services although the approach does not work well on services that are very expensive or persistent.

 

Link to post
Share on other sites
8 hours ago, bearrock said:

 

If consolidations are driving down quality, then I would view that more as consolidation gone wrong then an inherent flaw in consolidation itself (now that may be different if we can copy the UK system where government fixes the price and PCPs are mandated to give five referrals to patients and couple that with easily accessible metrics on patient outcome).  The reason I don't view that as inherent flaw in consolidation is because institutions widely acknowledged in this country as top in it's field are all major health systems.  

 

As to elasticity, this is the study:

 

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5600717/

 

 

 

1.  You're ignoring data because of a pre-conceived notion.  Data should cause to you to re-consider your preconceived notions.  That some very good health care systems are large isn't really good evidence that all large health care systems are good.  In any other industry, it is largely accepted that a decrease in competition raises prices and lowers quality.  That's exactly what we are seeing in the health care industry. 

 

2.  The study only looks at people with insurance that work for big companies.  Those are the people that we have to worry about the least.  Mean monthly spending for preventative care is only $5 for the people in this study.  People that spend on average $5 for their preventative care (because insurance is picking up the rest) aren't the issue and yes for them preventative care is going to be mostly inelastic.  That's my family and yes, for my wife and I healthcare in general is largely inelastic.  We have different PCPs, but it has nothing to do with costs.  She goes to a large health care system because she perceives that she's getting better care.  I go to a small local doctor because it is more convenient (closer to my home and when I go shorter waiting times).  Neither of us considers costs because our costs don't change much based on provider (e.g. my co-pay is what my co-pay is).  But we also don't need the health care system to change for us.  Same thing for things like pharmacies.  My costs are low enough that I don't shop around.

 

We aren't talking about re-shaping our health care system based on people spending $5 a month on preventative care.

 

(Interestingly even for those people, emergency care appears to be more elastic than preventative care, and I've already shown that consolidation increases PCP costs by 5%.  It seems possible than that emergency care costs are going up because of consolidation.)

 

**EDIT**

I sympathize with you.  If you would have told 2010 me that consolidation in the health care industry would drive up prices and drive down quality, I'd have told you were likely wrong.  I would have argued (and did argue) that health care is largely inelastic and that competition and (control of) supply didn't matter much.

 

But we now have years of studies saying that's what happened, and it appears to be happening at every level (hospitals, specialists and PCPs) based on different studies.  To hold that same view given the current data doesn't make sense.

Edited by PeterMP
Link to post
Share on other sites
1 hour ago, PeterMP said:

 

1.  You're ignoring data because of a pre-conceived notion.  Data should cause to you to re-consider your preconceived notions.  That some very good health care systems are large isn't really good evidence that all large health care systems are good.  In any other industry, it is largely accepted that a decrease in competition raises prices and lowers quality.  That's exactly what we are seeing in the health care industry. 

 

 

The underlying study being cited ad nauseam by the various articles on consolidation leading to worse outcome all point to Carnegie Mellon study, which is leaning on NHS study and Kessler McClellan study, both of which looks specifically at heart patients.  That's a limited measurement of care quality and also may not account for inherent factors adversely effecting outcome.  Rural areas would be more prone to consolidation but could also lead to delayed care, earlier discharge at wish of the patient, proximity to hospital, etc.  And there's no control for comparing patients with similar condition and severity at admission, it just takes the block as a whole.  Even then, Kessler study shows different results for the 80's data where the correlation between consolidation and worse quality is ambiguous at best and correlation only exists for the first half of 90's they looked at.  Even after all that, comparing consolidation pre-ACA and post-ACA is comparing apples to oranges because until the ACA, consolidation would be driven by pure profit motive and not related to patient outcome (somewhat generalizing)

 

I wouldn't foreclose the possibility of consolidation leading to worse care quality, but I don't think those studies are sufficient to reach that conclusion.

 

Quote

2.  The study only looks at people with insurance that work for big companies.  Those are the people that we have to worry about the least.  Mean monthly spending for preventative care is only $5 for the people in this study.  People that spend on average $5 for their preventative care (because insurance is picking up the rest) aren't the issue and yes for them preventative care is going to be mostly inelastic.  That's my family and yes, for my wife and I healthcare in general is largely inelastic.  We have different PCPs, but it has nothing to do with costs.  She goes to a large health care system because she perceives that she's getting better care.  I go to a small local doctor because it is more convenient (closer to my home and when I go shorter waiting times).  Neither of us considers costs because our costs don't change much based on provider (e.g. my co-pay is what my co-pay is).  But we also don't need the health care system to change for us.  Same thing for things like pharmacies.  My costs are low enough that I don't shop around.

We aren't talking about re-shaping our health care system based on people spending $5 a month on preventative care.

(Interestingly even for those people, emergency care appears to be more elastic than preventative care, and I've already shown that consolidation increases PCP costs by 5%.  It seems possible than that emergency care costs are going up because of consolidation.)

**EDIT**

I sympathize with you.  If you would have told 2010 me that consolidation in the health care industry would drive up prices and drive down quality, I'd have told you were likely wrong.  I would have argued (and did argue) that health care is largely inelastic and that competition and (control of) supply didn't matter much.

But we now have years of studies saying that's what happened, and it appears to be happening at every level (hospitals, specialists and PCPs) based on different studies.  To hold that same view given the current data doesn't make sense.

e (because insurance is picking up the rest) aren't the issue and yes for them preventative care is going to be mostly inelastic.  That's my family and yes, for my wife and I healthcare in general is largely inelastic.  We have different PCPs, but it has nothing to do with costs.  She goes to a large health care system because she perceives that she's getting better care.  I go to a small local doctor because it is more convenient (closer to my home and when I go shorter waiting times).  Neither of us considers costs because our costs don't change much based on provider (e.g. my co-pay is what my co-pay is).  But we also don't need the health care system to change for us.  Same thing for things like pharmacies.  My costs are low enough that I don't shop around.

We aren't talking about re-shaping our health care system based on people spending $5 a month on preventative care.

(Interestingly even for those people, emergency care appears to be more elastic than preventative care, and I've already shown that consolidation increases PCP costs by 5%.  It seems possible than that emergency care costs are going up because of consolidation.)

**EDIT**

I sympathize with you.  If you would have told 2010 me that consolidation in the health care industry would drive up prices and drive down quality, I'd have told you were likely wrong.  I would have argued (and did argue) that health care is largely inelastic and that competition and (control of) supply didn't matter much.

But we now have years of studies saying that's what happened, and it appears to be happening at every level (hospitals, specialists and PCPs) based on different studies.  To hold that same view given the current data doesn't make sense.

 

Not all large employers hand out robust coverage.  The study also covers people on CDHP and HDHP, who would be the most sensitive to price differences.  Further, the average spending by people in the study is over $4600.  Just because one works for a large employer doesn't mean that health care spending of that size would be de minimis (Walmart would be a large employer too).  

 

Now is healthcare spending totally inelastic?  No.  But compared to other consumer goods, it's as close as it gets.  We see upper range of -0.4+ and lower range of -0.02-4.  Even at -0.4, that's comparable to first class airplane tickets (purchased by people spending money to burn or other people's money) or cigarettes (who are literally addicted to the product).  At -0.02 and -0.04, elasticity might as well not exist.  You can decouple all the major health systems, lower cost by 5, 10, 15% and it would barely make a dent in consumer choice in price shopping in healthcare.

Link to post
Share on other sites
1 hour ago, bearrock said:

 

The underlying study being cited ad nauseam by the various articles on consolidation leading to worse outcome all point to Carnegie Mellon study, which is leaning on NHS study and Kessler McClellan study, both of which looks specifically at heart patients.  That's a limited measurement of care quality and also may not account for inherent factors adversely effecting outcome.  Rural areas would be more prone to consolidation but could also lead to delayed care, earlier discharge at wish of the patient, proximity to hospital, etc.  And there's no control for comparing patients with similar condition and severity at admission, it just takes the block as a whole.  Even then, Kessler study shows different results for the 80's data where the correlation between consolidation and worse quality is ambiguous at best and correlation only exists for the first half of 90's they looked at.  Even after all that, comparing consolidation pre-ACA and post-ACA is comparing apples to oranges because until the ACA, consolidation would be driven by pure profit motive and not related to patient outcome (somewhat generalizing)

 

I wouldn't foreclose the possibility of consolidation leading to worse care quality, but I don't think those studies are sufficient to reach that conclusion.

 

 

Not all large employers hand out robust coverage.  The study also covers people on CDHP and HDHP, who would be the most sensitive to price differences.  Further, the average spending by people in the study is over $4600.  Just because one works for a large employer doesn't mean that health care spending of that size would be de minimis (Walmart would be a large employer too).  

 

Now is healthcare spending totally inelastic?  No.  But compared to other consumer goods, it's as close as it gets.  We see upper range of -0.4+ and lower range of -0.02-4.  Even at -0.4, that's comparable to first class airplane tickets (purchased by people spending money to burn or other people's money) or cigarettes (who are literally addicted to the product).  At -0.02 and -0.04, elasticity might as well not exist.  You can decouple all the major health systems, lower cost by 5, 10, 15% and it would barely make a dent in consumer choice in price shopping in healthcare.

 

1.  That consolidation (and lack of competition) have a negative impact on quality just comes from one study is just wrong.

 

There are multiple studies that find that consolidation and lack of competition drives down quality in the US in multiple different places over a period of years now.  I don't change my mind based on one study, especially a very limited study.

 

E.g. hospitals from 2012 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3423176/

 

Dialysis facilities in 2018: https://pdfs.semanticscholar.org/64ce/3f16f6f39519847bbac7f58923468781ce70.pdf

 

There are also studies that show that costs differences in PCPs aren't tied to better quality and that PCP prices are tied to competition.

 

At best, consolidation is having a very mixed affect on quality.

 

2.  Walmart isn't providing insurance to many of its employees though so the ones that don't have insurance through Walmart aren't included in the study.  Walmart provides no health insurance for part time employees.  And yes, the total costs of healthcare in the study is significant and for the things that are more significant you see greater elasticity.  But the preventative care costs are low.  We aren't talking about overhauling our health care system because of the costs of preventative care in that study.  That in a study with low preventative care costs that it is inelastic isn't at all surprising.

 

Everybody I know shops around for airline prices and tickets.  Price isn't the only thing that matters (quality in terms of stops, etc.), but prices are a big driving factor.  I don't know anybody that just says they always fly whatever airline without looking at prices.

 

(And again, the mechanism at which consolidation affects prices is essentially irrelevant.  Whether prices are rising because  people can't shop around or some other factor isn't important unless it is something like increased quality.  Which certainly doesn't seem to be happening (large scale or across the board).)

Edited by PeterMP
Link to post
Share on other sites

And I want to make it clear, I'm not really against a nationalized health care system.  There's no doubt that a nationalized health care system lowers over head costs and for an industry like health care that's a significant driver of costs.  And given the importance of health care, that might be a reasonable thing to do to bring down costs.

 

(Taking this back to the direction of the election thread then)  From my perspective, in the current Democratic party you seem to have an extreme where Biden is still to the right of many other western countries in terms of a health care plan, while the Bernie's plan group are to the left.

 

Nobody really seems to proposing what has worked in many other western countries (e.g. a plan that is literally Medicare of all).

Link to post
Share on other sites
33 minutes ago, PeterMP said:

 

Everybody I know shops around for airline prices and tickets.  Price isn't the only thing that matters (quality in terms of stops, etc.), but prices are a big driving factor.  I don't know anybody that just says they always fly whatever airline without looking at prices.

 

 

I'm writing my MBA thesis on the airline industry and I can say with certainty price is the absolute determination of airline ticket purchases. The things you mentioned are sometimes a thought, but ultimately it is a solely price driven utility when it comes to personal leisure travel.

 

 

Link to post
Share on other sites
1 hour ago, PeterMP said:

 

At best, consolidation is having a very mixed affect on quality.

 

 

I definitely see that.  My question is whether such effect on quality can be solely attributed to consolidations or whether other factors may be in play as well.  For example, rural area will likely result in worse outcome for certain type of treatment and rural areas are also less likely to see high competition.

 

Quote

2.  Walmart isn't providing insurance to many of its employees though so the ones that don't have insurance through Walmart aren't included in the study.  Walmart provides no health insurance for part time employees. 

 

Walmart eliminated coverage for 24 hours and fewer part time workers in 2011 (and 30 hours and fewer in 2015, but that covers time period after the study).  That still covers a lot of non-managerial/executive Walmart employees  The point is not the the study covers all Walmart employees, but that just because you get insurance from large corporations doesn't mean that you are insulated from cost considerations in health care decisions.

 

Quote

And yes, the total costs of healthcare in the study is significant and for the things that are more significant you see greater elasticity.  But the preventative care costs are low.  We aren't talking about overhauling our health care system because of the costs of preventative care in that study.  That in a study with low preventative care costs that it is inelastic isn't at all surprising.

 

Everybody I know shops around for airline prices and tickets.  Price isn't the only thing that matters (quality in terms of stops, etc.), but prices are a big driving factor.  I don't know anybody that just says they always fly whatever airline without looking at prices.

 

 

Setting aside preventative care, emergency room is a big ticket item, but you see that people do not shop around.  Even the most elastic medical procedures/items are sitting at -0.4.  That things like prescription drugs and mri scans have such low price elasticity should show you how inelastic the market is.  That's still bottom of the barrel when compared to traditional consumer spending.  Discount airline tickets are -0.9.  Airfares for pleasure trips are -1.5.  You only see comparable price elasticity in first class plane tickets, where the target audience don't really care all that much about how much they spend.  

 

You're focusing on price elasticity rising for certain types of medical procedures as evidence that price elasticity exists in the healthcare market.  To a certain extent, yes it does.  But compared to other markets, it is still extremely inelastic.  Lower price through competition is unlikely to have consumers change their behavior all that much just as a first class flyer doesn't choose Airline A over Airline B for cheaper tickets despite Airline B offering a preferable experience.    

 

Quote

(And again, the mechanism at which consolidation affects prices is essentially irrelevant.  Whether prices are rising because  people can't shop around or some other factor isn't important unless it is something like increased quality.  Which certainly doesn't seem to be happening (large scale or across the board).)

 

I thought this whole discussion started with whether rolling back consolidation would result in change in consumer behavior.  We got a bit sidetracked with whether consolidation might be justifiable on other grounds, but wasn't the original point whether competition would result in lower prices through market forces?  Empirical data would suggest that it would have some effect.  My point was that we can't expect competition to have downward effect on price to the extent we see in other traditional markets because healthcare consumers' behavior with respect to price is nowhere near as sensitive as we see in other traditional markets.

 

Link to post
Share on other sites
3 hours ago, bearrock said:

I thought this whole discussion started with whether rolling back consolidation would result in change in consumer behavior.  We got a bit sidetracked with whether consolidation might be justifiable on other grounds, but wasn't the original point whether competition would result in lower prices through market forces?  Empirical data would suggest that it would have some effect.  My point was that we can't expect competition to have downward effect on price to the extent we see in other traditional markets because healthcare consumers' behavior with respect to price is nowhere near as sensitive as we see in other traditional markets.

 

No, the original point is that Biden's plan (which includes reversing consolidation) might bring down medical costs in manner that might be "enough", or even at least be a good first step in a process that is "enough".

 

Consolidation certainly appears to have been a significant driver of cost increases and that a plan that includes reversing consolidation coupled with other ideas might be "enough".

 

Not that healthcare behave identical to other markets.  The conversation started in the context of the various health care plans that are being supported by the Presidential candidates.

 

And yes, the data includes people that aren't Walmart executives, but you also have to realize that the data includes people that are insured based on the results are based on their type of insurance and includes Walmart executives and we don't really know what the mix.  It isn't hard to understand that people that are insured and are picking their insurance based on their economic situation might be misrepresentative with respect to the larger population that we really need to really help with health care costs.


As part of that, emergency room spending is actually something that other studies find changes a lot when people gain insurance.  People without insurance don't tend to go ERs, but people with insurance are more likely to go to an ER.  And so you actually get larger differences when people go from being insured to being uninsured with ER elasticity. 

 

e.g. ER visits increase with Medicaid expansion for non-emergency uses:

 

https://www.modernhealthcare.com/medicaid/medicaid-expansion-increased-ed-use-study-shows

 

That for this subset of people that ERs are inelastic isn't that surprising because they have insurance. 

 

I'm not going to say for the people that it matters most to that the health care market behaves just like other traditional markets.  But it is clear that consolidation is causing prices to increase without any clear benefits.  The health care market appears to behave much more like other markets than was expected in 2008.  Consolidation appears to have caused prices to go up with AT BEST no affect on quality, which is what you'd expect of traditional markets.  Maybe the result(s) aren't the same magnitude as you'd see in other markets, but the general behavior is the same.

 

And a plan that includes reversing consolidation might be a good first step in something that is "enough".

 

(I've already said, I suspect you will have to do more than what is in Biden's plan and cap profits and CEO compensation for large health care companies directly, if legally/Constitutionally possible.  And even that won't eliminate the issue of over head costs so in the end a nationalized system might be required.  That is heavily going to depend on what your idea of "enough" is.)

Edited by PeterMP
Link to post
Share on other sites
9 minutes ago, PeterMP said:

 

No, the original point is that Biden's plan (which includes reversing consolidation) might bring down medical costs in manner that might be "enough", or even at least be a good first step in a process that is "enough".

 

This was your response to my first post

 

Quote

I'm sure if you look, you can find old posts of mine here where I argue that the health care market/industries are heavily inelastic.  Which is essentially what you are arguing and has been a pretty common view by liberal economists.  But over the last 5+ years there has been a number of studies that show that isn't the case.  I'm honestly not sure why the markets appear to be as elastic as they are, but it is hard to argue with the studies that have come out.  And I'd still argue the health care market/industries aren't rational or good markets for the reasons laid out by @gbear , but it is pretty clear they are heavily elastic (and going to a nationalized health care system won't make them rational or good markets either, I don't think.)

 

No matter how you view the numbers, healthcare market still very inelastic compared to other markets.  There's no way to call them heavily elastic.  Which was why I said competition isn't going to have the same effect in healthcare markets that it will have in other markets.

 

Quote

And yes, the data includes people that aren't Walmart executives, but you also have to realize that the data includes people that are insured based on the results are based on their type of insurance and includes Walmart executives and we don't really know what the mix.  It isn't hard to understand that those values might be misrepresentative with respect to the larger population that we really need to really help with health care costs.


As part of that, emergency room spending is actually something that other studies find changes a lot when people gain insurance.  People without insurance don't tend to go ERs, but people with insurance are more likely to go to an ER.  And so you actually get larger differences when people go from being insured to being uninsured with ER elasticity. 

 

e.g. ER visits increase with Medicaid expansion for non-emergency uses:

 

https://www.modernhealthcare.com/medicaid/medicaid-expansion-increased-ed-use-study-shows

 

That for this subset of people that ERs are inelastic isn't that surprising because they have insurance.

 

 

And this was precisely my point.  Healthcare market will tend be inelastic for people who have insurance because of the way we structure cost reimbursement.  Lowering the cost has only so much noticeable effect on the consumer's bottom line, certainly not enough to effect their behavior like a traditional market as seen by the elasticity measures in the NIH study.  You could say that healthcare remains elastic for people without coverage, but the entire point was to shrink or eliminate the people without insurance coverage, not kick people off insurance and hope market forces take over.  If future admins are successful in their stated goal of covering more people with health insurance, then we will be moving people off the elastic end of the market into the inelastic, which is already the much larger segment of the population anyway.

 

Quote

I'm not going to say for the people that it matters most to that the health care market behaves just like other traditional markets.  But it is clear that consolidation is causing prices to increase without any clear benefits.  The health care market appears to behave much more like other markets than was expected in 2008.  Consolidation appears to have caused prices to go up with AT BEST no affect on quality, which is what you'd expect of traditional markets.  Maybe the result(s) aren't the same magnitude as you'd see in other markets, but the general behavior is the same.

 

And a plan that includes reversing consolidation might be a good first step in something that is "enough".

 

(I've already said, I suspect you will have to do more than what is in Biden's plan and cap profits and CEO compensation for large health care companies directly, if legally/Constitutionally possible.  And even that won't eliminate the issue of over head costs so in the end a nationalized system might be required.  That is heavily going to depend on what your idea of "enough" is.)

 

For consolidation/competition to effect prices by market forces, there has to be elasticity.  We see in the study that that's not the case.  Yet we see empirical data that consolidation has increased prices.  There could be myriads of explanation for that.  Perhaps hospitals are operating under the mistaken impression that healthcare is more elastic than it really is and applying that belief in setting prices.  Perhaps many consolidations occurred as a result of over-supply of health services, resulting in unsustainably low pricing and consolidation resulted in correction.  Maybe areas that are amenable to consolidation and low competition has regional characteristics that are more likely to lead to higher cost.  Or consolidating health systems are increasing prices or more services in an attempt to deliver services that they think will lead to improved patient outcome (regardless of whether they are actually successful in such an endeavor).  The answer to that question could address whether consolidation is a laudable goal (it may not be).  But if healthcare system is indeed inelastic, or at least much less elastic than a traditional market, then I would be very skeptical of thinking that increased competition will make a meaningful difference in cost.  If correlation between higher cost and consolidation is caused by something other than elasticity, then the factors that drove the higher cost will still be there after rolling back consolidation.

Link to post
Share on other sites
1 hour ago, bearrock said:

 

This was your response to my first post

 

No that wasn't my response to your first post.  It was PART of my post to your first post that was clearly tagged onto the end as a parenthetical comment with an edit.  It clearly wasn't meant to be the most significant part of my first post.

 

My first post also talked about reversing consolidation being something that lowers prices and that the mechanism doesn't really matter, which wasn't part of a parenthetical comment tagged onto the with an edit all of which you managed to drop in your quote.

 

"We can argue over the mechanism of the process, but it is hard to believe if consolidation is driving price increases to patients and competition is tied to lower prices that reversing  the consolidations that have happened won't lower prices.

 

Now, it might not be much or enough (and I tend to think it won't and if you go back to one of my posts I alluded to doing what was done to the insurance industry to other industries, and I suspect that we'll probably have to do the same with healthcare providers (e.g. profits and upper level management compensation will have to be capped for large health care providers)).

 

But to unilaterally declare it isn't enough or to hold that it won't work at all isn't supported by the evidence."

 

I was already telling you there, I didn't care about the mechanism and was talking about what would be enough or work and that was the main point.  Not the part tagged onto the end as an edit in a parenthetical comment.

 

And the part you quoted is still correct.  No, the health care market isn't probably like some other markets, but it appears to be more elastic than expected at the time the ACA was drafted.  The part you are quoting doesn't mention other markets.  It is talking about a comparison in time.  The health care market appears to be heavily elastic as compared to what was expected prior to the drafting of the ACA.

 

1 hour ago, bearrock said:

 

And this was precisely my point.  Healthcare market will tend be inelastic for people who have insurance because of the way we structure cost reimbursement.  Lowering the cost has only so much noticeable effect on the consumer's bottom line, certainly not enough to effect their behavior like a traditional market as seen by the elasticity measures in the NIH study.  You could say that healthcare remains elastic for people without coverage, but the entire point was to shrink or eliminate the people without insurance coverage, not kick people off insurance and hope market forces take over.  If future admins are successful in their stated goal of covering more people with health insurance, then we will be moving people off the elastic end of the market into the inelastic, which is already the much larger segment of the population anyway.

 

And my point is that if there are people out there with good enough insurance that they don't really care about their costs, then that if they don't respond based on prices, I don't care.  As I've said, health care is inelastic for me because the costs don't matter much to me because they are low.  We don't have to trash our health care system and create a new one for me.  Most people with private insurance are happy with their health care.  Arguing that we have to completely reinvent a health care system for a group of people that are generally happy with it, especially if that group can be expanded on, doesn't make much sense.

 

We only need to lower costs for the group(s) that actually care about costs (and probably the government) (and therefore respond to prices).

 

1 hour ago, bearrock said:

If correlation between higher cost and consolidation is caused by something other than elasticity, then the factors that drove the higher cost will still be there after rolling back consolidation.

 

This part isn't true.  Even given your examples, if some of those things are true, then you'd expect rolling back consolidation to lower prices.

 

If hospitals think the health care industry is more elastic than it is, then rolling back consolidation would reasonably lower prices.  If hospitals even perceive they need to lower their prices when in a more competitive environment, then increasing competition will lower prices.  If people that run small health care systems are more in touch with their community and just except less profits because of that connection, then rolling back consolidation would reasonably lower prices.

 

It is possible that rolling back consolidation won't lower prices.  But to say it won't happen (for sure), is just false.

 

Also studies that look at the effect of consolidation do normally try to correct and control for different obvious variables (e.g. rural vs. urban, etc.).  It is a correlation, but it is a correlation where people are trying to control for confounding and other possible explanatory factors.  And when they do so, consolidation is still a driving factor with respect to increase costs.

Edited by PeterMP
Link to post
Share on other sites
1 hour ago, PeterMP said:

 

No that wasn't my response to your first post.  It was PART of my post to your first post that was clearly tagged onto the end as a parenthetical comment with an edit.  It clearly wasn't meant to be the most significant part of my first post.

 

My first post also talked about reversing consolidation being something that lowers prices and that the mechanism doesn't really matter, which wasn't part of a parenthetical comment tagged onto the with an edit all of which you managed to drop in your quote.

 

"We can argue over the mechanism of the process, but it is hard to believe if consolidation is driving price increases to patients and competition is tied to lower prices that reversing  the consolidations that have happened won't lower prices.

 

Now, it might not be much or enough (and I tend to think it won't and if you go back to one of my posts I alluded to doing what was done to the insurance industry to other industries, and I suspect that we'll probably have to do the same with healthcare providers (e.g. profits and upper level management compensation will have to be capped for large health care providers)).

 

But to unilaterally declare it isn't enough or to hold that it won't work at all isn't supported by the evidence."

 

I was already telling you there, I didn't care about the mechanism and was talking about what would be enough or work and that was the main point.  Not the part tagged onto the end as an edit in a parenthetical comment.

 

 

Again, you are premising your argument on the assumption that decreased competition from consolidation is driving healthcare cost.  I'm telling you that given the relative inelasticity of the healthcare market, I don't think you can make that assumption.  I will also note that my statement is not the same as unilaterally declaring it won't do enough (we haven't even defined what enough is) or it won't work at all.  I specifically agreed that market forces have some role, just limited.  The unequivocal declarations are straw man you built up all on your own.

 

Quote

And the part you quoted is still correct.  No, the health care market isn't probably like some other markets, but it appears to be more elastic than expected at the time the ACA was drafted.  The part you are quoting doesn't mention other markets.  It is talking about a comparison in time.  The health care market appears to be heavily elastic as compared to what was expected prior to the drafting of the ACA.

 

That's obviously a major qualifier that was not in your original post.  And that may or may not be correct, depending on the definition of the ambiguous "what was expected prior to the drafting of the ACA" phrasing.

 

Quote

And my point is that if there are people out there with good enough insurance that they don't really care about their costs, then that if they don't respond based on prices, I don't care.  As I've said, health care is inelastic for me because the costs don't matter much to me because they are low.  We don't have to trash our health care system and create a new one for me.  Most people with private insurance are happy with their health care.  Arguing that we have to completely reinvent a health care system for a group of people that are generally happy with it, especially if that group can be expanded on, doesn't make much sense.

We only need to lower costs for the group(s) that actually care about costs (and probably the government) (and therefore respond to prices).

 

And this is what single payer system advocates are pointing to.  You may be happy with your policy and cost because the 10-15% rise in healthcare cost ends up being not very much out of your pocket.  But from a macro perspective, those obviously add up.  We've already devised a system where the ultimate decision of seeking out medical service is made by the party with the most static financial interest in the game.  System like Bernie is advocating also has the overuse problem like you pointed out, but the current system has a problem in that patients aren't all that incentivized to keep costs in check, hence the relative inelasticity.  It would be one thing if healthcare marketplace was completely private, but where government is a player in the game and policy demands that government play a role in ensuring overall cost manageable access to healthcare, including providing funding for coverage of indigent population, people being happy with their insurance policies may not be enough to prevent an overhaul of the system.

 

Quote

This part isn't true.  Even given your examples, if some of those things are true, then you'd expect rolling back consolidation to lower prices.

If hospitals think the health care industry is more elastic than it is, then rolling back consolidation would reasonably lower prices.  If hospitals even perceive they need to lower their prices when in a more competitive environment, then increasing competition will lower prices.  If people that run small health care systems are more in touch with their community and just except less profits because of that connection, then rolling back consolidation would reasonably lower prices.

 

If the mistaken impression is the cause and if such impression will perpetuate, then yes rolling back consolidation will solve that particular cause of price increase.  But if such mistaken impression was never going to perpetuate, then people in competitive markets will eventually catch on and the price lowering effect of competition would be ameliorated.

 

Quote

It is possible that rolling back consolidation won't lower prices.  But to say it won't happen (for sure), is just false.

 

 

Yes, that is false.  Which is why I never said it.

 

Quote

Also studies that look at the effect of consolidation do normally try to correct and control for different obvious variables (e.g. rural vs. urban, etc.). It is a correlation, but it is a correlation where people are trying to control for confounding and other possible explanatory factors. And when they do so, consolidation is still a driving factor with respect to increase costs.

 

I quoted you at least one study where correlative effect was unclear for part of the time period they looked at.  And given that even inelastic procedures have some elasticity, it wouldn't surprise me to find out that there's correlation.  I don't, however, think I've seen studies that said consolidation is the driving factor with respect to increase in cost.  

 

Put it this way.  US hospitals charge 60% more for procedures than European counterparts.  This is a consolidation issue?  Americans aren't just asking why am I paying more than my cousin who lives in a big city with lot of competition.  They are asking why they have to pay 60% more than people in other developed countries for those same procedures.

Edited by bearrock
Link to post
Share on other sites
3 hours ago, bearrock said:

 

Again, you are premising your argument on the assumption that decreased competition from consolidation is driving healthcare cost.  I'm telling you that given the relative inelasticity of the healthcare market, I don't think you can make that assumption.  I will also note that my statement is not the same as unilaterally declaring it won't do enough (we haven't even defined what enough is) or it won't work at all.  I specifically agreed that market forces have some role, just limited.  The unequivocal declarations are straw man you built up all on your own.

 

 

That's obviously a major qualifier that was not in your original post.  And that may or may not be correct, depending on the definition of the ambiguous "what was expected prior to the drafting of the ACA" phrasing.

 

 

And this is what single payer system advocates are pointing to.  You may be happy with your policy and cost because the 10-15% rise in healthcare cost ends up being not very much out of your pocket.  But from a macro perspective, those obviously add up.  We've already devised a system where the ultimate decision of seeking out medical service is made by the party with the most static financial interest in the game.  System like Bernie is advocating also has the overuse problem like you pointed out, but the current system has a problem in that patients aren't all that incentivized to keep costs in check, hence the relative inelasticity.  It would be one thing if healthcare marketplace was completely private, but where government is a player in the game and policy demands that government play a role in ensuring overall cost manageable access to healthcare, including providing funding for coverage of indigent population, people being happy with their insurance policies may not be enough to prevent an overhaul of the system.

 

 

If the mistaken impression is the cause and if such impression will perpetuate, then yes rolling back consolidation will solve that particular cause of price increase.  But if such mistaken impression was never going to perpetuate, then people in competitive markets will eventually catch on and the price lowering effect of competition would be ameliorated.

 

 

Yes, that is false.  Which is why I never said it.

 

 

I quoted you at least one study where correlative effect was unclear for part of the time period they looked at.  And given that even inelastic procedures have some elasticity, it wouldn't surprise me to find out that there's correlation.  I don't, however, think I've seen studies that said consolidation is the driving factor with respect to increase in cost.  

 

Put it this way.  US hospitals charge 60% more for procedures than European counterparts.  This is a consolidation issue?  Americans aren't just asking why am I paying more than my cousin who lives in a big city with lot of competition.  They are asking why they have to pay 60% more than people in other developed countries for those same procedures.

 

1.  It was strongly implied.  You added the comparison to other industries, which was not implied.  Heavily requires a comparison to something (heavily with respect to what?).  You added the comparison to other industries, which was not implied.  The post also talks about liberal economists.  Clearly, the ACA was not passed with the idea that consolidation would appear to increase prices and lower quality.  If you told the people that designed and wrote the ACA that in 2019 that a large number of studies showed that consolidation in the health care industry increased prices and lowered quality the ACA would have been written differently.

 

2.  For the false, I left out the word inelastic.   I think I made the point sufficiently well in the part that you edited out.  Your statement was false.

 

3.  You gave a study related to the correlation between quality and consolidation.  Not costs.  And the said study by your own admission was limited in terms of what it looked at (heart attacks, I believe) and in another country. 

 

As in with many things, there is no single driving factor, but there is a lot of evidence that consolidation is a significant factor in increasing prices. 

 

I've already given multiple studies in the other thread related to different parts of the health care industry as I've also done with respect to quality.

 

But I'll give you more:

 

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2013.1279

 

"We found that an increase in the market share of hospitals with the tightest vertically integrated relationship with physicians—ownership of physician practices—was associated with higher hospital prices and spending. We found that an increase in contractual integration reduced the frequency of hospital admissions, but this effect was relatively small. Taken together, our results provide a mixed, although somewhat negative, picture of vertical integration from the perspective of the privately insured."

 

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.23.2.175

 

"We examine the effects of hospital consolidation on the actual prices paid by preferred provider organizations. We find that price increases following consolidations among nearby hospitals invariably equaled or exceeded median price increases among other hospitals in the same market. Using multivariate regression analysis, we find that consolidation enables hospitals to increase prices in three of the four markets studied; these increases are generally statistically significant. In the remaining market, the measured effect was zero. Our results suggest that some, but not all, consolidations of competing hospitals facilitate price increases. We conclude that antitrust scrutiny of hospital consolidation is warranted."

 

(Note, here we're getting beyond what is paid by people and what PPOs are paying.)

 

https://www.sciencedirect.com/science/article/abs/pii/S0167629615000375

 

"As expected, we find that premiums are indeed higher for plans sold in markets with higher levels of concentration relevant to insurer transactions with employers, lower for plans in markets with higher levels of insurer concentration relevant to insurer bargaining with hospitals, and higher for plans in markets with higher levels of hospital market concentration."
 

(and here we get premiums)

 

https://www.nber.org/papers/w12244

 

" In 2001, average HMO premiums are estimated to be 3.2% higher than they would have been absent any hospital merger activity during the 1990s. In 2003, we estimate that because of hospital mergers private insurance rolls declined by approximately .3 percentage points or approximately 695,000 lives with the vast majority of those who lost private insurance joining the ranks of the uninsured. Our estimates imply that hospital mergers resulted in a cumulative consumer surplus loss of over $42.2 billion between 1990 and 2001. It is estimated that all but a modest $95.4 million of the loss in consumer surplus is transferred from consumers to providers."

 

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2015.1229

 

"We measured health plan, hospital, and medical group market concentration using the well-known Herfindahl-Hirschman Index (HHI) and used a multivariate regression model to relate these measures to premium growth. Both states exhibited a positive association between hospital concentration and premium growth and a positive (but not statistically significant) association between medical group concentration and premium growth."

 

There are a large number of studies over years looking at different aspects of the health care industry using statistical approaches beyond basic correlations (i.e. multivariate statistics that are designed to account for confounding and other explanatory factors) that indicate consolidation drives up prices, premium costs, and drive down quality.  I know that goes against your pre-conceived notions, but that is what is supported by the data.

 

As for the determined inelasticity in the paper you posted.  What you are doing is taking values from a set of people where we expect to see inelastic behavior and saying based on that the whole market is inelastic.  And ignoring other studies.

 

The analogy using airlines would be that somebody does a survey of first class fliers that heavily don't care about prices and finds low elasticity.  And then ignoring other studies show that airline prices over all respond to changes in competition and declare for all cases air lines show low elasticity.

 

Now, in terms of the healthcare costs with respect to other countries (i.e. Europe), as other countries have different health care systems, there is no single answer.  But as I've already noted, much of the difference is due to greater over head costs.  I've already addressed that in multiple posts.

 

We can talk about why there's sort of a baseline difference (i.e. heavily because of greater over head costs) with respect to other countries and given those baseline cost differences why costs are still going up faster in the US (i.e. partly due to consolidation).

 

Obviously, there are always unknowns, but we also have reasonably large amount of data available to us on the issue.  And based on that data in totality, it strongly appears that consolidation and lack of competition causes significant increases in prices, costs, and premiums through different parts of the health care system.  Studies that come to these conclusions do try to control for other factors.  It is completely reasonable that reversing consolidation and increasing competition will lower costs, prices, and premiums.

 

Any other conclusion is not well supported by the available data.

 

And with that I'm done here.

Edited by PeterMP
Link to post
Share on other sites

Question ——why is the focus on insurance costs and not healthcare costs? If doctors and facilities charged a reasonable price for procedures, meds, diagnostics.....wouldn’t the system fix itself?

 

highly recommend the “Adam Ruins Everything” episode on healthcare. It explains how we got to our current state.

 

 

spoiler alert - it’s not the republicans fault.

Link to post
Share on other sites
33 minutes ago, PeterMP said:

 

1.  It was strongly implied.  You added the comparison to other industries, which was not implied.  Heavily requires a comparison to something (heavily with respect to what?).  You added the comparison to other industries, which was not implied.  The post also talks about liberal economists.  Clearly, the ACA was not passed with the idea that consolidation would appear to increase prices and lower quality.  If you told the people that designed and wrote the ACA that in 2019 that a large number of studies showed that consolidation in the health care industry increased prices and lowered quality the ACA would have been written differently.

 

 

You refer to old posts where you argued that healthcare market was heavily inelastic.  So that was what?  Heavily inelastic compared to what was expected prior to the ACA?  Anyone with modicum of understanding on price elasticity would understand heavily elastic as demand for goods or services that are very sensitive to price change and heavily inelastic as the opposite.  Even if healthcare market is more elastic than some undefined standard expected by some undefined class of people before the ACA, it doesn't change the fact that it is still a very inelastic service compared to other consumer goods or services.  

 

Quote

2.  For the false, I left out the word inelastic.   I think I made the point sufficiently well in the part that you edited out.  Your statement was false.

 

 

The quote is "It is possible that rolling back consolidation won't lower prices.  But to say it won't happen (for sure), is just false." (Not sure where inelastic fits in that sentence).  

 

You accuse me of claiming that rolling back consolidation won't lower prices for sure.  These are some of the quotes from me in the exchanges on this topic

 

I can see those kind of services (mri/cat scans) being more amenable to market forces.  I mean I wouldn't say it doesn't have any impact, just limited impact 

 

I'm not going to say that traditional market forces have no place in healthcare cost control.  But it's not that simple either because, as you and I agree, healthcare is not a rational market.

 

- You're focusing on price elasticity rising for certain types of medical procedures as evidence that price elasticity exists in the healthcare market.  To a certain extent, yes it does.  But compared to other markets, it is still extremely inelastic.

 

How anyone with even a rudimentary understanding of English would read those sentences and claim that I stated that rolling back consolidations won't lower prices for sure is beyond me.  You've set up a straw man argument for reasons that passes understanding.  And then you doubled down on it.  That's totally disingenuous.  

 

Quote

3.  You gave a study related to the correlation between quality and consolidation.  Not costs.  And the said study by your own admission was limited in terms of what it looked at (heart attacks, I believe) and in another country. 

 

As in with many things, there is no single driving factor, but there is a lot of evidence that consolidation is a significant factor in increasing prices. 

 

I've already given multiple studies in the other thread related to different parts of the health care industry as I've also done with respect to quality.

 

But I'll give you more:

 

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2013.1279

 

"We found that an increase in the market share of hospitals with the tightest vertically integrated relationship with physicians—ownership of physician practices—was associated with higher hospital prices and spending. We found that an increase in contractual integration reduced the frequency of hospital admissions, but this effect was relatively small. Taken together, our results provide a mixed, although somewhat negative, picture of vertical integration from the perspective of the privately insured."

 

 

So that study (I believe it's the same methodology and authors as the study referenced in the stanford link you put in your first response) shows vertical integration resulting in slightly over 3% increase in prices.  Whether that can be considered a "major driving force" in cost increase depends on one's definition of "major driving force" I suppose.  This study looks at 2001 to 2007.  During that time period, healthcare cost rose at an annual average of 6.4% per year, about 50% over the entire period.  But 3% could be a major driving force I guess. 

 

Quote

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.23.2.175

 

"We examine the effects of hospital consolidation on the actual prices paid by preferred provider organizations. We find that price increases following consolidations among nearby hospitals invariably equaled or exceeded median price increases among other hospitals in the same market. Using multivariate regression analysis, we find that consolidation enables hospitals to increase prices in three of the four markets studied; these increases are generally statistically significant. In the remaining market, the measured effect was zero. Our results suggest that some, but not all, consolidations of competing hospitals facilitate price increases. We conclude that antitrust scrutiny of hospital consolidation is warranted."

 

(Note, here we're getting beyond what is paid by people and what PPOs are paying.)

 

 

Hypothetical 10% increase in HHI in a metropolitan area would result in 6.6% increase in price.  I would assume 10% increase in HHI is a lot harder to achieve in a metropolitan area then a rural area. 

 

Quote

https://www.sciencedirect.com/science/article/abs/pii/S0167629615000375

 

"As expected, we find that premiums are indeed higher for plans sold in markets with higher levels of concentration relevant to insurer transactions with employers, lower for plans in markets with higher levels of insurer concentration relevant to insurer bargaining with hospitals, and higher for plans in markets with higher levels of hospital market concentration."
 

(and here we get premiums)

 

https://www.nber.org/papers/w12244

 

" In 2001, average HMO premiums are estimated to be 3.2% higher than they would have been absent any hospital merger activity during the 1990s. In 2003, we estimate that because of hospital mergers private insurance rolls declined by approximately .3 percentage points or approximately 695,000 lives with the vast majority of those who lost private insurance joining the ranks of the uninsured. Our estimates imply that hospital mergers resulted in a cumulative consumer surplus loss of over $42.2 billion between 1990 and 2001. It is estimated that all but a modest $95.4 million of the loss in consumer surplus is transferred from consumers to providers."

 

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2015.1229

 

"We measured health plan, hospital, and medical group market concentration using the well-known Herfindahl-Hirschman Index (HHI) and used a multivariate regression model to relate these measures to premium growth. Both states exhibited a positive association between hospital concentration and premium growth and a positive (but not statistically significant) association between medical group concentration and premium growth."

 

 

Again, we see the 3.2 number.  I'm starting to think you and I differ on the definition of "major driving force"

 

Quote

There are a large number of studies over years looking at different aspects of the health care industry using statistical approaches beyond basic correlations (i.e. multivariate statistics that are designed to account for confounding and other explanatory factors) that indicate consolidation drives up prices, premium costs, and drive down quality.  I know that goes against your pre-conceived notions, but that is what is supported by the data.

 

 

No one other than the straw man you created argued that consolidation would not lead to higher prices (and thereby increase premiums).  I'll admit, I'm still not sold on consolidation being the cause for lower quality, but I do acknowledge the correlation between the worse outcome and consolidation.  It's the causation part that still has me unconvinced.  Nonetheless, relationship between price and consolidation was never questioned.  Only the significance of the relationship and the extent of the impact on reverse consolidation was being debated.

 

Quote

As for the determined inelasticity in the paper you posted.  What you are doing is taking values from a set of people where we expect to see inelastic behavior and saying based on that the whole market is inelastic.  And ignoring other studies.

 

The analogy using airlines would be that somebody does a survey of first class fliers that heavily don't care about prices and finds low elasticity.  And then ignoring other studies show that airline prices over all respond to changes in competition and declare for all cases air lines show low elasticity.

 

 

Again, the study includes people with CDHP and HDHP.  No one would be expected to exhibit more elastic behavior than those individuals other than patients who would have to pay out of pocket at non-negotiated rates without the benefit of any charitable breaks (and these people probably don't exist.  People without insurance will get discounts from providers and indigent patients will get charitable breaks or medicaid).  Although the study includes people who are likely to exhibit inelastic behavior, the mere fact that average spending was over $4600 means that they had plenty of motivation to exhibit elastic behavior.  People exhibit much higher elasticity for airline tickets, which doesn't cost nearly that much.  You are trying to argue away the study as inapplicable because you don't like the result.  And I may have missed it, but I don't believe you posted studies that shows healthcare market is elastic.

 

Quote

Now, in terms of the healthcare costs with respect to other countries (i.e. Europe), as other countries have different health care systems, there is no single answer.  But as I've already noted, much of the difference is due to greater over head costs.  I've already addressed that in multiple posts.

 

We can talk about why there's sort of a baseline difference (i.e. heavily because of greater over head costs) with respect to other countries and given those baseline cost differences why costs are still going up faster in the US (i.e. partly due to consolidation).

 

In the context of what kind of cost reduction is good enough, this is always going to be an issue.  US system is much more private than every other country and much more expensive.  People are asking why.  Given that total rollback of consolidation is extremely unlikely to result in bringing US prices down to the level of other developed countries, people naturally ask why US doesn't just adopt the other countries' model.  Does it matter what makes these foreign systems cheaper?  Who cares whether it's overhead, government fixed pricing, or something else, as long as it's not inferior healthcare.  I think people can be pretty sure though that we'll never achieve that kind of savings through increased competition.  

 

Quote

Obviously, there are always unknowns, but we also have reasonably large amount of data available to us on the issue.  And based on that data in totality, it strongly appears that consolidation and lack of competition causes significant increases in prices, costs, and premiums through different parts of the health care system.  Studies that come to these conclusions do try to control for other factors.  It is completely reasonable that reversing consolidation and increasing competition will lower costs, prices, and premiums.

 

Any other conclusion is not well supported by the available data.

 

And with that I'm done here.

 

Again, no one disputes that rolling back consolidation will likely lower prices.  The key word is significant or major.  Some of the studies you cited showed 3.2% difference over more than half a decade for highly competitive vs low competitive markets.  When the average price increase was 6.4% per year, 3.2% percent over 6-7 years is not what I would call significant or major.  But if that's your definition of significant or major, I suppose that's your call.

Link to post
Share on other sites
1 hour ago, thegreaterbuzzette said:

Question ——why is the focus on insurance costs and not healthcare costs? If doctors and facilities charged a reasonable price for procedures, meds, diagnostics.....wouldn’t the system fix itself?

 

highly recommend the “Adam Ruins Everything” episode on healthcare. It explains how we got to our current state.

 

 

spoiler alert - it’s not the republicans fault.

 

For most of the last 2 days, we've talking about prices in the context of health care costs.  I just brought premiums in the context of the last post to show the extent of the work that has been done related to consolidation and the extent of the effect it has been found to have on the health care system.  I was just trying to eliminate this idea that consolidation having an effect is based on correlations and in not many studies or somehow was not very believable, which it seemed to me was being implied.

 

Generally, I think many moderates (including the likes of Biden for the Democrats) have moved on to healthcare costs.  There is a sense that with the ACA we have the insurance side under some control (the overhead issue is an issue), and the next step is to tackle the underlying healthcare costs.

 

Biden's plan is about lowering prescription drugs costs, hospital costs, etc, while getting more people insured and increasing competition in the insurance market too.

Link to post
Share on other sites
2 hours ago, bearrock said:

No one other than the straw man you created argued that consolidation would not lead to higher prices (and thereby increase premiums).

 

Again, no one disputes that rolling back consolidation will likely lower prices. 

 

I'm sorry, but I can't pass this one up.

 

"If correlation between higher cost and consolidation is caused by something other than elasticity, then the factors that drove the higher cost will still be there after rolling back consolidation."

 

"Assumption that market forces will lower healthcare costs also assumes that consumers will put cost at a very high consideration.  If that were true, people would switch to HMOs."

 

Study from 1998:

 

https://www.tandfonline.com/doi/abs/10.1080/13571519884495

 

"Antitrust advocates believe that horizontal consolidation in hospital markets can reduce competition and increase prices while merger advocates believe it can benefit consumers by reducing service duplication. "

 

"Merger advocates say that applying traditional antitrust concepts to the health care sector prevents economies of scale from being realized and increases prices."

 

The study actually concludes that consolidation does lower prices, which with some other studies drives thinking in the 2000s that consolidation is actually good.

 

And so you get things like:

 

https://www.washingtonpost.com/wp-dyn/content/article/2010/08/15/AR2010081503201.html

 

"Carilion says it represents an ideal envisioned by the nation's new health-care law: a network that increases efficiency by bringing more doctors and hospitals onto one team, integrating care from the doctor's office to the operating room. The name for such networks, which the new law strongly promotes with pilot programs, is accountable care organizations, or ACOs -- providers joining together to be "accountable" for the total care of patients, with incentives from insurers to keep people healthy and costs down."

 

I added the underline and italics for you.

 

https://www.managedcaremag.com/archives/2010/10/accountable-care-organizations-hold-promise-will-they-achieve-cost-and-quality

 

"Health care industry pundits believe the Patient Protection and Affordable Care Act (PPACA) of 2010 will restructure the way millions of Americans receive health insurance, but that it may do little to control costs. There is concern that one of the unintended consequences will be further consolidation of hospitals and physicians, which could result in still higher prices.

 

Largely overlooked by many critics, however, are payment and delivery system reforms in the legislation that will lead to the further development of accountable care organizations (ACOs). If the payment reforms are fully implemented, ACOs have the capacity to significantly reduce costs and restructure health care delivery."

 

"Job #1 of ACOs is to reduce costs."

 

People not only argued that consolidation wouldn't necessarily raise prices (i.e. the use of could above).  They actually argued the consolidation would lower prices.  There was a belief that the health care market was inelastic enough that consolidation could happen and not just not increase prices, but still see prices go down because of economies of scale.  That the advantage of economies of scale would off set any elasticity in the health care market.

 

It isn't a straw man.

 

So market forces can lower costs without people switching to HMOs (outside of special cases like high tech MRIs)?

 

Is it an assumption or something nobody really disputes?

 

It is 3.2% increase of hospital costs PER a standard deviation in market share of fully integrated organizations.  Not 3.2% increase over the whole time period.  

 

Market share of fully integrated organizations increase a little less than 15% during that time period.  The standard deviation is 0.325 so it is like 46 standard deviation units.  

 

Now, the math gets hard from there to turn it into a percent of health care spending because you'd have to know what percent of hospital costs is healthcare spending and how much of that spending is associated with fully integrated organizations (which I guess would be related to their market share).  You've sort of done an apples to oranges comparison in your post that I'm not comfortable with at all. 

 

Then 3.2% of HMO premiums IN 2001 (in ONE year), which is a completely different than the 3.2% PER A STANDARD DEVIATION UNIT for hospitals.   Then there's physician costs, tests costs, etc.  All of those percents add up.

 

(And that doesn't even touch prescription drug prices, which have been a major driver of health care costs over the relevant period of time.)

 

If you have a little bit of experience with multivariate statistics, then it is pretty clear this is a pretty large affect for the things they are looking at (e.g. hospital costs).  People don't keep finding significant results if the thing isn't very important in different studies.  Things that are close the noise level frequently show up as noise.

 

Total health care costs increases for years were driven heavily by drug prices so in that context, they might not be overly large.  But that's why you need another approach to deal with drug prices.

 

(I will apologize.  I butchered the part about what you said and then didn't clarify very well.  This statement isn't true:

 

"If correlation between higher cost and consolidation is caused by something other than elasticity, then the factors that drove the higher cost will still be there after rolling back consolidation."

 

It is very possible that even if the relationship between higher costs and consolidation are due to something other than elasticity that prices will still come down (which is the point I think I made sufficiently clearly in the part you edited it out in your other reply).  I think the idea that the link between consolidation, competition and prices isn't due to elasticity doesn't hold much water, but there are number of mechanisms by which it could not be and you'd still see prices come down by rolling back consolidation.

 

)

Edited by PeterMP
Link to post
Share on other sites
6 hours ago, PeterMP said:

 

I'm sorry, but I can't pass this one up.

 

 

Alright, I'll clarify for your benefit.  I certainly didn't make the argument that consolidation would not lead to higher prices.  When I said no one, I meant no one in this discussion on this board, not no one in the history of the universe. (Interesting vacillation between reading in a lot implications when it suits you and taking on an almost nonsensical literal reading in this case.  You really thought my "no one" expanded into everyone on the face of planet throughout all history?  If so, it's probably a waste of time to have any further discussion with you on any subject.  It's almost as if we're communicating in totally different languages.)

 

And in case you are harboring some misconception that there's going to be some huge gap in standard deviation (you do understand what standard deviation is right?) between lowest end of the competition and highest end of the competition and that is somehow going to show massive difference in price between low competition and high competition, this from the first stanford article:

 

Quote

Studying a measure that averaged prices across multiple types of office visits, in their most conservative model, being in the top 10 percent of areas with the least competition was associated with 3.5 to 5.4 percent higher mean price.

 

I believe that study looks at 2003-2010.  3.2% difference was also in the HMO study you cited.  In an industry where annual average increase is 6.4%, if you want to conclude that 3-5% over several years is a major driving force, that's your opinion.  Have at it.  

Edited by bearrock
Link to post
Share on other sites
8 hours ago, bearrock said:

I believe that study looks at 2003-2010.  3.2% difference was also in the HMO study you cited.  In an industry where annual average increase is 6.4%, if you want to conclude that 3-5% over several years is a major driving force, that's your opinion.  Have at it.  

 

You really are great.  It isn't 3-5% over the years.  It is 3-5% from higher competition areas and lower competition areas.  HHI is a measure of competition.  If you live in an area with a high HHI that indicates a lack of competition.

 

https://jamanetwork.com/journals/jama/fullarticle/1917436

 

"In our more conservative model, this difference in the HHI was associated with 3.5% to 5.4% higher mean prices."

 

In the years they studied, if you lived in area with high competition changes that resulted in lower competition (to a certain level of low) would reasonably increased prices for doctor visits by 3.5 to 5.4%.

 

In 2010 if you lived in a high competition environment and something happened and your area become a lower competition environment you could have reasonably expect prices for a doctors visit to go up 3.5 to 5.4%.  And unless you believe that something has changed compared to the years they studied, then the same is true today.  If the level of competition where you live drops by "this difference in HHI", you could reasonably expect prices for doctors to go up 3.5-5.4%

 

It is like saying, I studied basketball players shot mechanics over a period of years and people that made this change to shooting their mechanics saw their shooting percentage will go up by X%.

 

None of the numbers you have talked about are given as X% over this period of years.

 

(Just a piece of advice, you essentially never see anybody that does a study over a period of years that ends with results over the period of years they are studying because if you do that it makes it is difficult for you to compare your results to anybody else's and anybody else to compare their results to yours.  If I do a study based on data from 2010-2013 and that's the most basic result I give, unless somebody else does a study from 2010-2013, my results are at best hard to be compared to theirs.  Anybody that knows what they are doing is going to try to give put their results in some sort of more generalized format.  It is hard to write a conclusion that's going to get published if you can't compare to other studies, and it is certainly going to negatively affect how much you get cited.)

Edited by PeterMP
Link to post
Share on other sites
32 minutes ago, PeterMP said:

 

You really are great.  It isn't 3-5% over the years.  It is 3-5% from higher competition areas and lower competition areas.  HHI is a measure of competition.  If you live in an area with a high HHI that indicates a lack of competition.

 

https://jamanetwork.com/journals/jama/fullarticle/1917436

 

"In our more conservative model, this difference in the HHI was associated with 3.5% to 5.4% higher mean prices."

 

In the years they studied, if you lived in area with high competition changes that resulted in lower competition (to a certain level of low) would reasonably increased prices for doctor visits by 3.5 to 5.4%.

 

In 2010 if you lived in a high competition environment and something happened and your area become a lower competition environment you could have reasonably expect prices for a doctors visit to go up 3.5 to 5.4%.  And unless you believe that something has changed compared to the years they studied, then the same is true today.  If the level of competition where you live drops by "this difference in HHI", you could reasonably expect prices for doctors to go up 3.5-5.4%

 

It is like saying, I studied basketball players shot mechanics over a period of years and people that made this change to shooting their mechanics saw their shooting percentage will go up by X%.

 

None of the numbers you have talked about are given as X% over this period of years.

 

(Just a piece of advice, you essentially never see anybody that does a study over a period of years that ends with results over the period of years they are studying because if you do that it makes it is difficult for you to compare your results to anybody else's and anybody else to compare their results to yours.  If I do a study based on data from 2010-2013 and that's the most basic result I give, unless somebody else does a study from 2010-2013, my results are at best hard to be compared to theirs.  Anybody that knows what they are doing is going to try to give put their results in some sort of more generalized format.  It is hard to write a conclusion that's going to get published if you can't compare to other studies, and it is certainly going to negatively affect how much you get cited.)

 

Assuming the 3-5% is an accumulating effect of consolidation attributable only to the time period between starting point of the study and the end point is the most charitable interpretation of the results to your position.  I chose that interpretation because your argument falls apart even under that scenario.

 

If instead the 3-5% is the net result of the decades of upwards trend in merger and consolidation (which I would actually view as the more accurate position), the net effect of consolidation is that much less.  Only way to get around that would be to assume that these markets go through cycles of consolidations and break ups, which I haven't seen any evidence of.  Thus, if the price difference is 3-5% after decades of upward pressure generated by consolidation over time since the late 70's, net effect of consolidation on healthcare prices is that much less than assuming 3-5% difference is an effect of consolidations manifesting only after a few years. 

 

Considering that you get more price increase on average in a single year regardless of competition level, it truly boggles the mind to think that consolidation was the major driving force in cost increase and that reversing it would make a major difference.  You can drop prices by 3-5% by making the area extremely competitive.  Great.  The savings generated by reversing this decades long effect will be more than wiped out in one year.

Link to post
Share on other sites
45 minutes ago, bearrock said:

 

Assuming the 3-5% is an accumulating effect of consolidation attributable only to the time period between starting point of the study and the end point is the most charitable interpretation of the results to your position.  I chose that interpretation because your argument falls apart even under that scenario.

 

Whether it is more charitable or not, it is still wrong.  Wrong is wrong.

 

But even what you've said here is still wrong because you haven't addressed how long it takes for changes of "this difference in HHI" to happen.  You've just assumed that it takes decades for "this difference in HHI" to accumulate or at least the years of the study.

 

Going back to example of the basketball player, if I used data from 5 years and you assumed it took 5 years (or decades) for people to make the change in their mechanics I was studying, you'd likely be wrong.  I studied people that changed over that 5 years, but that doesn't mean it takes 5 years to make the change.

 

45 minutes ago, bearrock said:

Considering that you get more price increase on average in a single year regardless of competition level

 

I don't think you have any idea how much price increase you get in a single year regardless of competition level, especially if you leave out pharmaceutical drugs (which I've already address in the above posts).  I don't think you've looked at a study that looks at how much prices increase that takes into account changes in competition level to generate a price increase per a year independent of changes in competition level.

 

And even more than that, I think you don't even understand that you don't know that (and MAYBE you'll know it now that I've pointed it out to you, but I'm not super optimistic on that front).  I don't think there's a study out there where if you take out drugs, you could use their results to make a graph of price increase (or inflation or whatever) accounting independent of changes in competition vs. years

 

 

(I've really got be done with this.  I'm sorry.  It bugs me to leave something that's just wrong posted, but I'm too busy this week to keep correcting your errors so I'm going to have let them go if you post more.

 

But I'll give you another piece of advice.  Health economists are generally smart people and generally you don't get into health economics to do abstract work, and you certainly don't advance in it doing abstract work.  And based on the number of links I've given you, it is clear there's a lot of studying going in the area of consolidation.  They aren't generally wasting their time studying things that are practically irrelevant.  The lead author on this study is the chair of the Department of Health Research and Policy.  You don't get to be the chair of the Department of Health Research and Policy and have your research published in JAMA if people don't think it has practical significance.

 

If you don't understand work, some times it is useful to consider how much work is being done in the general area, who published the work, and where it was published to understand its at least perceived importance.  Work of perceived less significance isn't likely to make it to a front line journal and be coupled with a press release from Stanford.)

 

**EDIT**

This might help you understand the point I'm making about what I don't think you understand.  

 

https://tamino.wordpress.com/2019/11/08/global-temperature-update-6/

 

He's plotting temperature anomaly vs. year, but it isn't the true measured temperature anomaly.  He's used statistical methods based on observed results to try to remove natural affects (volcanos, El Nino, etc.) that affect temperature.

 

era5_adj-1.jpg?w=500&h=333

 

I don't think you have any idea what the comparable graph of health care costs-drugs would look like if the effects of changes in competition were removed as he's (at least attempted) to remove the effects of natural events from his graph.

 

You only know what graphs look like with the measured values, but competition is changing with years too, and you don't know what that graph would look like if you took out the effects of competition.

Edited by PeterMP
Link to post
Share on other sites
1 hour ago, PeterMP said:

 

Whether it is more charitable or not, it is still wrong.  Wrong is wrong.

 

But even what you've said here is still wrong because you haven't addressed how long it takes for changes of "this difference in HHI" to happen.  You've just assumed that it takes decades for "this difference in HHI" to accumulate or at least the years of the study.

 

Going back to example of the basketball player, if I used data from 5 years and you assumed it took 5 years (or decades) for people to make the change in their mechanics I was studying, you'd likely be wrong.  I studied people that changed over that 5 years, but that doesn't mean it takes 5 years to make the change.

 

 

I don't think you have any idea how much price increase you get in a single year regardless of competition level, especially if you leave out pharmaceutical drugs (which I've already address in the above posts).  I don't think you've looked at a study that looks at how much prices increase that takes into account changes in competition level to generate a price increase per a year independent of changes in competition level.

 

And even more than that, I think you don't even understand that you don't know that (and MAYBE you'll know it now that I've pointed it out to you, but I'm not super optimistic on that front).  I don't think there's a study out there where if you take out drugs, you could use their results to make a graph of price increase (or inflation or whatever) accounting independent of changes in competition vs. years

 

 

(I've really got be done with this.  I'm sorry.  It bugs me to leave something that's just wrong posted, but I'm too busy this week to keep correcting your errors so I'm going to have let them go if you post more.

 

But I'll give you another piece of advice.  Health economists are generally smart people and generally you don't get into health economics to do abstract work, and you certainly don't advance in it doing abstract work.  And based on the number of links I've given you, it is clear there's a lot of studying going in the area of consolidation.  They aren't generally wasting their time studying things that are practically irrelevant.  The lead author on this study is the chair of the Department of Health Research and Policy.  You don't get to be the chair of the Department of Health Research and Policy and have your research published in JAMA if people don't think it has practical significance.

 

If you don't understand work, some times it is useful to consider how much work is being done in the general area, who published the work, and where it was published to understand its at least perceived importance.  Work of perceived less significance isn't likely to make it to a front line journal and be coupled with a press release from Stanford.)

 

**EDIT**

This might help you understand the point I'm making about what I don't think you understand.  

 

https://tamino.wordpress.com/2019/11/08/global-temperature-update-6/

 

He's plotting temperature anomaly vs. year, but it isn't the true measured temperature anomaly.  He's used statistical methods based on observed results to try to remove natural affects (volcanos, El Nino, etc.) that affect temperature.

 

era5_adj-1.jpg?w=500&h=333

 

I don't think you have any idea what the comparable graph of health care costs-drugs would look like if the effects of changes in competition were removed as he's (at least attempted) to remove the effects of natural events from his graph.

 

You only know what graphs look like with the measured values, but competition is changing with years too, and you don't know what that graph would look like if you took out the effects of competition.

 

I've obviously wasted too much time on this as well (though I don't know why this particular discussion caused me to do so).  In an effort to not further waste too much time on this, I'll briefly point out the following

 

1) 3-5% price difference may be an accumulated effect over time or may be a one time effect due to competition.  In order for you to argue that it's a major driving effect in the increase of healthcare cost, it would have to be an accumulated ongoing effect.  Whether it takes decades, years, or days to manifest itself, if the effect is onetime only, then it's a red herring in this debate.

 

2) Prescription drugs make up about 15% of healthcare spending and only decade where it drastically outpaced hospitals or physician cost increase was the 90's.  Other decades are fairly in line.    

 

3) I'm generally not in the habit of attacking the results of the studies done by experts (though I would not think them infallible obviously) and certainly have not done so here.  I never disputed that competition has an effect on healthcare cost.  But none of the studies discussed so far have said that consolidation was the major driving factor.  The last bit is not the result of learned conclusion by renowned academics in the field, but your conclusion based on the results of those studies.  Unless you twist the meaning of "major driving force", I don't see how you can reach that conclusion based on the studies out there and what we know about healthcare cost increase.

 

4) I don't know whether it's disingenuous or true confusion at this point.  Studies being done on the effect of competition on healthcare price are trying to address exactly what the temperature study is trying to address.  Taking out the other variables, what increase in price can we attribute to competition or lack thereof?    

 

Quote

Also studies that look at the effect of consolidation do normally try to correct and control for different obvious variables (e.g. rural vs. urban, etc.). It is a correlation, but it is a correlation where people are trying to control for confounding and other possible explanatory factors.

 

Remember this????  The studies are trying to get at exactly what percentage of price increase is attributable to competition.   I mean you wrote it yourself for crying out loud....

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...