Tag Archives: competition

Health Alerts

Medicare Fraud: Moratoria Miss the Mark

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(A version of this Health Alert has been published by Forbes. A longer version of this Health Alert has been submitted to the U.S. House of Representatives Committee on Ways & Means, Subcommittee on Health, for the May 19, 2015 hearing titled, “Improving Competition in Medicare: Removing Moratoria and Expanding Access.)

Senior Man ThinkingMedicare fraud is a serious problem. The Medicare bureaucracy has the power to impose moratoria on new providers in geographic or program areas it deems susceptible to fraud. However, preventing new competitors from providing Medicare benefits reduces competition and cannot reduce fraud by incumbent providers. A better way would be to give Medicare beneficiaries a financial interest in combatting fraud.

Last February, the Government Accountability Office issued its annual report on federal programs that it identifies as high risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement.  Medicare is a longstanding member of the list: “We designated Medicare as a high-risk program in 1990 due to its size, complexity, and susceptibility to mismanagement and improper payments”. A quarter of a century has gone by and Medicare is still on the list. Continue reading Medicare Fraud: Moratoria Miss the Mark →

Hospitals

Obamacare’s Hospital Monopolies

Obamacare induces significant consolidation among providers, which the Federal Trade Commissioner has long recognized can be anti-competitive. State antitrust overseers are also pushing back against this effect:

During the 2008 financial crisis, “too big to fail” became a familiar phrase in the U.S. financial system. Now the U.S. health-care system is heading down the same path with a record number of hospital mergers and acquisitions—95 last year—some creating regional monopolies that, as in all monopolies, will likely result in higher prices from decreased competition.

Some see the dangers. In a rare move, Massachusetts Superior Court Judge Janet Sanders recently blocked Partners HealthCare—Harvard’s affiliated 10-hospital conglomerate and Massachusetts’ largest private employer—from acquiring three competitor hospitals.

(Marty Makary, “The Obamacare Effect: Hospital Monopolies,” Wall Street Journal, April 19, 2015)

Hospitals

Hospital Competition Works

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At least it works in northern Italy:

For the past 10 years, public and private hospitals in Lombardy have competed directly for patients, and in doing so have created what is considered by many to be one of Europe’s most efficient health-care systems…

Around 30% of hospital care in Lombardy is private now—more than anywhere else in Italy. And service in both the private and public sector has improved. Patients in Lombardy receive among the widest array of treatments in Italy, and are covered for a longer list of prescription drugs than almost anywhere else in Europe. Waiting times were slashed, too.

Hospitals

More Quality Competition

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Across the nation, hospitals are trumpeting shortened wait times in ERs in hopes of attracting more patients:

  • In Arizona, Scottsdale Healthcare System advertises emergency room wait times for its four hospitals online and on a flat screen in each hospital’s emergency waiting room.
  • Edward Hospital in Naperville, Ill., sends text messages back to prospective patients with its wait times.
  • Some Healthcare Corp. of America hospitals in west Florida post wait times on billboards, according to reports from the St. Petersburg Times. “Accidents happen fast. Emergency care should, too,” reads one electronic billboard, which also lists wait times.
  • Other hospitals are testing a service where patients register online and pay a fee to hold their spot while they wait at home.
  • The Hospital of Central Connecticut has an iPhone application listing wait times and directions to the hospital.

Full article on more efficient hospital emergency rooms.

Health Alerts

Quality Competition

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Most providers don’t compete for patients either on price or on quality. Since out-of-pocket payments by patients are well below the true cost of their care, demand exceeds supply and services are rationed by waiting — just like in Canada. In such an environment, quality improvements do not increase provider income and quality degradation does not decrease it. That’s why so much of the health care system resembles the Department of Motor Vehicles.

In some specialized markets, however, providers actively seek more customers, often advertising directly to patients — on TV, in magazines, etc., sometimes in other cities and sometimes nationwide. For example, New York’s Mount Sinai Medical and Memorial Sloan-Kettering and Massachusetts General in Boston are all aggressive advertisers on cancer care. In these markets, third-party payment significantly exceeds the marginal cost of care, and supply often exceeds demand.

Providers in these markets typically compete for patients based on quality. They need patient-pleasing services in order to attract their clientele in the first place and to retain them as ongoing customers. And their activities raise an obvious question: Why can’t we have quality competition system-wide?

Continue reading Quality Competition →

Science and Other News

Let Private Firms Compete to Provide Airline Security

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This is Arnold Kling and Nick Schulz in USA Today:

One firm might rely heavily on passenger interviews, as the Israeli airline El-Al is known for. Another firm might rely more on the latest scanning technology. Companies might vary their rules for boarding and carry-on luggage by passenger risk category — low-risk passengers could take their liquids and gels and keep their shoes on, while high-risk passengers would have to check such items or scan them…

Competition will force even the lowest-quality provider to raise standards year after year by adopting the good ideas that emerge from their competitors. This is why even a cheap automobile today has more amenities than a luxury car of 30 years ago.

New Health Care Law

John Lott Fact-Checks President Obama, Part I

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Just how competitive is the health insurance marketplace? A 2008 study by the American Medical Association shows that one or two health insurance providers dominate the market in most states. The NCPA has also produced a study of health insurance concentration. Here is President Obama on the same issue:

Consumers do better when there is choice and competition. Unfortunately, in 34 states, 75% of the insurance market is controlled by five or fewer companies. In Alabama, almost 90% is controlled by just one company. Without competition, the price of insurance goes up and the quality goes down.

Yet about 55 percent of employees get insurance through a self-insured employer and these employers hire “third-party administrators” to manage their plans. There are about 900 of them and they compete in a national marketplace.

Continue reading John Lott Fact-Checks President Obama, Part I →

Health Insurance

Consumer Choice Explained

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Using a brain scan, naturally:

Shopping bagsEvery shopping decision is an emotional tug-of-war, as the pleasure of getting something new competes with the pain of spending money… When subjects were first exposed to the item, a part of the brain called the nucleus accumbens (NAcc) was turned on… When the subjects were exposed to the cost of the product, the insula was activated… If the insula’s negativity exceeded the positive feelings generated by the NAcc, then the subject almost always chose not to buy the item… However, if the NAcc was more active than the insula, the object proved irresistible.

Study here [gated, but with abstract].