The Cornell Health Policy Insight Panel is a project of Cornell University, partnering Weill Cornell Medicine and the Brooks School of Public Policy. It involves more than 60 health care and health policy experts who are asked to periodically give their opinions on important policy issues. The panel of experts is diverse, including such free-market health policy luminaries as Michael Cannon (Cato), Brian Blase (Paragon) and Joe Antos (AEI), along with well-respected academics (Jon Gruber, Sherry Glied, Craig Garthwaite, David Cutler, Michael Chernew, Amitabh Chandra, Melinda Buntin, David Blumenmthal, Joe Newhouse, Stephen Parente, Harold Pollack) and about 50 others.
Yet, opinions are also diverse. Their most recent survey was published in Health Affairs Forefront and looked at ways to make health care affordable.
The first survey question was:
- 1. Adopting reference pricing models in employer-sponsored insurance for common shoppable health care services (e.g., elective imaging and joint replacements) would substantially reduce insurance premiums for employees. [Strongly agree, Agree, Uncertain, Disagree, Strongly disagree, Don’t know]
Just under 40% agreed or strongly agreed that reference pricing would make health care more affordable. Nearly 30% were uncertain or did not know, while just over 30% disagreed or strongly disagreed.
Some panelists pointed to the successful reference pricing experiments with the California Public Employees Retirement System (CalPERS) that looked at joint replacement. In the experiment CalPERS beneficiaries were successfully steered to lower cost hospitals, prompting competition among hospitals. The way the experiment worked was that members were told in advance that the reference price was $30,000. Any spending above the reference price would be entirely at the expense of the member. Select a hospital that charged $100,000 and your cost sharing would be $70,000. Pick from a list of hospitals that only charged $30,000 and you would owe nothing. The experiment worked well.
Some panelists pointed out reducing costs for some high-cost procedures would not necessarily translate into lower premiums. That points to another problem: insurance company consolidation. Other panelists thought reference pricing could not be easily scaled beyond a few big-ticket procedures. In the age of artificial intelligence (AI) I suspect reference pricing could be easily scaled. (holds phone to mouth) “Hey Siri, I need a colonoscopy. Where is the cheapest facility in my network?” For that matter, I can easily imagine combining reference pricing with AI powered competitive bidding, where an insurer’s AI algorithm queries various hospitals for their best price and the hospitals bid. What I really suspect, however, is that some of the panelists simply do not believe patients should ever need to consider costs when seeking medical care. Some undoubtedly favor Medicare for All.
The second survey question:
- 2. Residents in states that impose caps on the prices that hospitals can charge commercial insurers (e.g., 1.5 times Medicare rates) would experience substantial reductions in total health care costs.
About three-quarters (75.4%) Agreed or strongly agreed with the statement. Nearly 15% were uncertain or did not know, while 11.4% disagreed or strongly disagreed. While it is obvious that price caps would reduce costs, there would be unintended consequences. Hospitals would probably drop unprofitable services and increase those that make money. It would be politically difficult to implement and enforce. A program in Oregon to limit costs to 200% of Medicare saved money but created financial stress on hospitals. Over time some may go out of business, while others would likely adapt. But it is heavy handed and, like all price controls, it would be difficult to know where the prices should be set. The price at one hospital should not necessarily be the same as the others.
The third and final survey question:
- 3. Strong federal antitrust enforcement significantly limiting new mergers of hospital systems would substantially reduce the growth of health care prices in affected markets.
Two-thirds of panelists agreed or strongly agreed that stronger anti-trust enforcement limiting greater hospital consolidation would reduce hospital prices. Eighteen percent were uncertain while 16% disagreed. One problem is the question is academic in nature because about 90% of hospital markets are already highly consolidated. It is easier to prevent a hospital merger than to break up a hospital system after they have merged. Some questioned the feasibility of breaking up hospital systems.
The above three major policy proposals reveal the differences of opinion among policy experts. It would be interesting to know how each panelist voted.
Read more at:
Health Affairs: Experts: Hospital Price Caps Could Improve Affordability But Might Bring Unintended Consequences