Study: ACOs Will Make Costs Higher
This is from Chris Jacobs:
Earlier this week, the National Institute for Health Care Management released a new analysis outlining one of the ways in which Obamacare could raise health costs, by encouraging consolidation that allows dominant health care providers to charge higher prices. The paper notes that “the integration of hospitals and physicians into the accountable care organizations encouraged by [Obamacare] is expected to accelerate provider consolidation in local markets.” And the result of that consolidation? “Hospitals in concentrated markets charge significantly higher prices to private payers than do their peers in more competitive markets. Furthermore, these prices are significantly above their direct costs of providing care.” For instance, prices for angioplasty procedures were nearly 50% higher in concentrated (i.e., non-competitive) markets than in competitive markets – and profit margins were higher as well.
Don’t doubt this at all.
There is some evidence that the integration required to create ACOs will lead to collusion rather than competition.
But how about costs to public payers such as Medicare? From what I understand ACO’s get to share savings, so there is a major incentive there to reduce costs. Shouldn’t we be talking about overall costs rather than just costs to private payers?