In six markets in the U.S., insurers’ cost control efforts have been hindered due to hospital and physician consolidation, according to a new study from Georgetown University's Center on Health Insurance Reform.
For its study, the Washington, D.C.-based center, examined strategies that private insurance companies used to control costs and how those strategies have been affected by industry consolidation. The researchers interviewed a variety of stakeholders in six midsize healthcare markets, including Asheville, N.C., Colorado Springs, Colo., Detroit, Indianapolis, Northern Virginia and Syracuse, N.Y.
Here are four key findings:
1. Hospitals' motivations to consolidate remains similar in all six markets. After mergers, hospitals look to use their larger size to have better negotiation power with insurers. Even smaller hospitals were able to win higher rates post-merger, the study found.
2. Payers have powerful tools to help rein in healthcare costs, but they are unwilling to use them. Employers have refused to support insurers' moves to exclude high-priced providers from their plan networks or roll out narrow networks because they fear backlash from employees. As a result, payers that provide benefit plans to employers are unable to use some of their most powerful strategies to lower healthcare costs, the study authors found.
3. Public policy strategies aren't working as planned. Public policies, like anti-trust enforcement or certificate of need laws, to limit the ill-effects of consolidation have had limited effectiveness, the authors found.
4. Using high deductibles as a strategy to control health benefit spending may be "tapped out." Most employers have attempted to shift the cost burden to employees through offering high deductible plans and other cost-sharing strategies, but the strategy may be tapped out because employees can no longer afford their deductibles.
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