Health care’s robber barons
It’s becoming harder and harder to afford to live in Massachusetts, and to do business here. Everyone knows health care costs are a major cause of this problem. But what no one talks about is the biggest reason why.
Monopolistic practices in the Massachusetts hospital market have made the market look like something an early 20th century robber baron would create. It’s stunning that these practices continue to be allowed in our state – regarded by so many as the most progressive in the country.
People in Massachusetts pay the most per capita for health care in the country. Why? Following the deregulation of the hospital market in the early 1990s under the leadership of a Republican governor, hospitals have been on a buying binge, gobbling up competitors and folding them into giant hospital “systems.” Today, a staggering 72 percent of the hospital market in our state is controlled by these systems.
Extensive data show these consolidations do not improve the efficiency or quality of care — at least not in ways that get passed along to consumers. Instead, they make it possible for hospitals to increase their prices — costs which do get passed along to consumers in the form of ever-increasing health insurance premiums.
And the bigger the hospital system, the more leverage they have to charge whatever they want. It’s one of the reasons we read stories about thousands of dollars in charges for simple procedures, and prices that are wildly different from one hospital to the next — or sometimes even in the same hospital, depending on who’s paying the bill.
Leaders of both parties are responsible for allowing these anticompetitive practices to happen on their watch. Governor Patrick, the Democratic Legislature, and Attorney General (and Democratic gubernatorial hopeful Martha Coakley have taken no effective action to stop these mergers. Republicans have been no better. Charlie Baker, Republican candidate for governor, who was a senior official in the Weld administration when it decided to de-regulate the hospital market, has followed the national Republican strategy of blaming Obamacare for our health cost problems.
Governor Patrick says Massachusetts’ 2012 health care cost containment law “cracked the code” on health care costs, but new merger activity that fuels these same anti-competitive practices continues even today, as illustrated most recently by the proposed acquisition of South Shore Hospital by Partners. The state’s non-partisan Health Policy Commission says this merger would have been expected to increase total medical spending between $23 million and $26 million each year. Meanwhile, according to a Feb. 7 report in The Boston Globe, the cost Massachusetts employers are told they can expect to be charged for insurance will increase from five percent to eight percent in 2014, well above the rate of growth promised in the 2012 “code-cracking” law.
We are not powerless to act. First, it’s time to stop these monopolistic mergers. Second, it is time to give the state’s Health Policy Commission some teeth: task it with establishing fair fee schedules that apply to hospitals across the state, thereby eliminating the excesses of price and market distortion caused by the large hospital systems.
While many like to think of Massachusetts as a national leader on health care reform, we have fallen behind other states, like Maryland, which has taken this kind of aggressive approach to reining in health care costs. Studies show that waste in health care comprises as much as 39 percent of all health care spending; if establishing a rational fee schedule could reduce hospital costs by just five percent, that’s nearly two billion dollars a year in savings. This would be money going directly back into the pockets of consumers, small businesses, families, and municipalities in Massachusetts.
The good news is that this kind of cost savings is inherently progressive — something especially important given the growing income inequality in our state. For people at the lower end of the income scale and middle-class families, those dollars will make a fair and important difference in their ability to save and get ahead.
At the end of the day this common-sense change has the power to truly help the vast majority of people in Massachusetts, something leaders across the political spectrum should be insisting on — now.
Evan Falchuk is the United Independent Party candidate for governor of Massachusetts.