Health Care’s Biggest Problem Is Getting Worse

Taken from The Washington Monthly

October 12, 2019

By Anne Kim

Many liberals and a growing number of Democratic presidential candidates have embraced a bold idea for reforming America’s broken healthcare system. The idea most in vogue—and the most debated—throughout the 2020 election has been to abolish private insurance in favor of a government-run national system, otherwise known as “Medicare for All.” Advocates of “single-payer” generally blame rapacious insurers as the principal villains of the current system, responsible for sky-high premiums and out-of-pocket expenses. Replacing for-profit insurance companies with a government program, the logic goes, would bring lower costs and coverage to everyone

But this singular focus on insurers means that the presidential hopefuls are neglecting an even bigger problem with far-reaching consequences for millions of Americans: the dominance of hospital monopolies in a growing number of health care markets nationwide.

Monopolies, in general, mean bad news for consumers. Health care is no exception. Mounting evidence shows that hospital consolidation exacerbates the system’s worst failings, bringing higher prices, fewer choices, and lower quality care to patients. And it’s only getting worse.

According to new research from the Health Care Cost Institute, nearly three out of four metro areas—72 percent—had “highly concentrated” hospital markets in 2016. Moreover, says HCCI senior researcher William Johnson, “almost 70 percent of metro areas were more concentrated in 2016 than they were in 2012.” This includes places like Milwaukee, Wisconsin, and Houston, Texas, which were “moderately concentrated” in 2012 but were “highly concentrated” just four years later. The most concentrated areas were places with populations under 300,000, like Springfield, Missouri. More densely populated areas, such as New York City and Philadelphia, were more competitive.

This trend has left Americans in concentrated hospital markets in a precarious position. A 2012 meta-review by economists Martin Gaynor and Robert Town found price hikes are especially dramatic—as much as 20 percent—when hospitals in already concentrated markets merge further. Even worse, the ultimate potential casualty of consolidation is often patient wellbeing. For instance, one major study by Daniel Kessler and Mark McClellan (later administrator of the Centers for Medicare and Medicaid Services) found that among Medicare beneficiaries, heart attack victims in more concentrated markets were 4.4 percent more likely to die than patients in the least concentrated markets. Gaynor and Town found similar results from other studies in their review. When hospitals stop having to compete for patients, their attention to quality suffers.

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