Who’s to blame for rising healthcare costs, insurers or providers, such as doctors or hospitals? Depending who you ask, either side places the blame on the other. Whether it’s insurers’ trying to meet the bottom line and remain profitable or physicians and hospitals attempting to increase revenue and improve their margins, one thing is for certain: Healthcare costs continue to rise.
Read on to determine where the blame lies.
By AVERY JOHNSON
A battle over who to blame for rising health-care costs is escalating, as groups seek to pin the problem on each other and say none of the health-care legislation under consideration does enough to solve it. U.S. spending on health care reached $2.5 trillion in 2009, according to federal estimates. It is expected to jump to $4.5 trillion in 10 years.
Insurers contend that they must pass on ever-higher bills from hospitals and doctors. Hospitals say they are struggling with more uninsured patients, demands by doctors for top salaries, and underpayments from Medicare and Medicaid.
And doctors say they are strong-armed by insurance monopolies and hampered by medical malpractice costs.
In the rush to point fingers, few solutions are emerging.
“It’s always someone else’s fault,” said Robert Laszewski, president of health-care consulting firm Health Policy & Strategy Associates. “There is not an incentive for these people to cooperate because the game they are all playing is getting a bigger piece of the pie.”
The issue has come into sharp relief as WellPoint Inc. has sought to defend its plan to raise some prices in California by up to 39%.
In a hearing Wednesday on Capitol Hill, WellPoint Chief Executive Angela Braly singled out dominant hospital systems for demanding 40% rate increases and drug companies for roughly 20% profit margins.
A WellPoint spokeswoman said that at least one hospital had asked for a 220% payment increase.
Many Democrats have cited lack of competition among insurers as a driver of higher prices. On Wednesday, the House of Representatives voted to repeal a longstanding insurance-industry exemption from federal antitrust laws. The bill now heads to the Senate, where its future is less certain.
Doctors complain of a lack of competition among insurers, as well.
A report by the American Medical Association this week argues that 500 insurance-company mergers in the past 12 years have led to markets dominated by one or two health plans.
This year, two insurers control 70% of the market in 24 states, up from 18 last year, the report said.
“There is no other company for doctors to go to” when an insurer comes to them with terms that they find unfavorable, said AMA President James Rohack. But insurers say is it doctors and hospitals that have gotten too powerful through consolidation.
A study published Thursday in the journal Health Affairs appears to back up their point, saying that insurers are weakened in their negotiations by their inability to exclude prominent doctors and hospitals from networks.
Authors from the Center for Studying Health System Change, a nonpartisan research group, conducted 300 interviews with California doctors and hospital and insurance executives in late 2008.
The study said two big networks of providers now dominate the northern part of the state: Sutter Health owns two dozen California hospitals and medical centers, and Catholic Healthcare West runs 33 hospitals.
In addition, the study said, doctors who are increasingly banding together for negotiating power are commanding yearly double-digit payment increases.
Hospitals and doctors shot back that the study was largely anecdotal and said integration improved efficiency.
Catholic Healthcare West said it took on $1.5 billion in bad debt from government underpayments last year; its size, it added, makes it possible to achieve some savings.
Sutter Health said increases in its reimbursement rates from private insurers have been in the single digits.
“We are doing our best to keep costs down because these health-care premium increases are not sustainable,” said Bill Gleeson, vice president of communications a Sutter Health.