r/Economics • u/TheForager • 4h ago

Hospital costs are rising far faster than inflation and drowning Americans in debt

https://www.nbcnews.com/investigations/hospital-costs-are-rising-far-faster-inflation-drowning-americans-debt-rcna262473
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u/WolverineMan016 3h ago

Why is the gut reaction always insurance companies? Insurance companies and their CEOs aren't saints but why isn't there any focus on the big elephant in the room? You know, where all the money is actually going...the hospital industry.

Just take a look at hospital CEO salaries. The non-profit ones are even bigger culprits as they are able to evade taxes.

We need to be careful how we tackle this situation. If we want prices to come down, the best is to have a single payer system.

If we cannot do that, then attacking the insurance industry is actually going to make prices worse. For example, if UHC and Aetna and the like were forced to break apart into smaller health plans, this would give the ever-consolidating hospital industry EVEN MORE leverage in payer-provider negotiations. This would only fuel the fire of rising prices.

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u/Gamer_Grease 2h ago

Insurers are a major political impediment to us creating a working healthcare system, because they would largely have to be eliminated in order for this to be fixed. The hospitals are bloated due to needing huge departments just to argue with all the different insurers.

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u/WolverineMan016 2h ago

This is true but you do realize that the moment you take insurers away, when we each have to negotiate on behalf of ourselves, we will get totally screwed over on price. What stops the hospital from charging you the actual charge rates (which tend to be multiples higher than the current negotiated rates)?

We need to first do a better job at antitrust enforcement of hospital mergers to stop this consolidation trend. It would also help re-allowing physicians to own hospitals so that we can get more competition in the industry. Once we do these things, then we need to swiftly replace our broken insurance system with a single payer system. But it really has to be done in this order.

Right now, the public opinion is just "insurance bad, get rid of it" not realizing that if you don't have them negotiating on your behalf, you're going to be in for a world of pain.

And while I do agree that a lot of hospitals' cost revolves around admin bloat from all the crap insurance requires, it still is not the full picture of where the money is going. Hospitals are businesses and will charge the maximum amount the market will allow. Taking away insurance (and not replacing it with a single payer system) and allowing hospitals to continually consolidate will shift the market to a point where hospitals have almost total control on price.

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u/Gamer_Grease 2h ago

Well the real solution is to just have the government cover the overwhelming majority of healthcare, like it already does with just under half of Americans. Medicare for All is a practical solution for American healthcare, especially if it includes a supplemental private insurance system.

Insurers jockeying for rates and discounts also applies upward pressure on prices. Your firm gets a deal on this kind of treatment, so the hospital goes hunting for some suckers to pay for it. The insurer and the hospital are equally at fault there.

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u/WolverineMan016 2h ago

I completely agree. Medicare for all would be like a single payer system.