Viewpoint: Hospitals don't want an all-payer system

An all-payer system, or a system requiring all hospitals to charge the same prices to each payer, would force hospitals to compete over pricing, Boston University health policy professor Austin Frakt, PhD, told BU Today.

Dr. Frakt, also the director of the VA Boston Healthcare System's Partnered Evidence-Based Policy Resource Center and a professor at Harvard's T. H. Chan School of Public Health in Boston, said hospitals' ability to contract varying prices with each insurer is a key reason the U.S. has among the highest per capita health spending in the world.

"Other countries have price controls. Many governments don't allow prices to be as high as they can be in the United States," he told BU Today. "We have public programs that put the cap on prices, but in the private sector, it's all done through private negotiation. We're willing to pay a lot for healthcare, so prices keep going up."

When asked whether an all-payer health system could take root in America, Dr. Frakt said it's not likely, but may be more possible than single-payer. No state has adopted a single-payer model, while Maryland, Massachusetts and New York are some of the states that have implemented all-payer rates, he said.

However, Dr. Frakt added, "Hospitals are powerful organizations. They wouldn't want this; they benefit from being able to charge different prices to different insurers. They absolutely will characterize it as: This is government coming in and meddling with the market and getting in between you and your healthcare provider."

Dr. Frakt noted a dip in healthcare spending comes with consequences. "There's a trade-off," he told BU Today. "If we clamp down on spending, there will be less innovation. Maybe we can't afford the rate of innovation we're paying for right now. I think there's a limit to how much we can spend on healthcare. There are some conditions for which the innovations won't happen, or they won't happen as fast."

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