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Hospitals Gain, U.S. Suffers

Even as Americans newly insured under the Affordable Care Act struggle with narrow networks, the WSJ has found at least one clear winner from the ACA reform: hospitals. The newly insured are pouring into hospitals across the country, boosting the profits of some hospital chains by as much as 44 percent. More:

The hospital industry supported the 2010 law—which was expected to cost hospitals $155 billion in penalties and government pay cuts over a decade—on the promise that it would deliver a wave of new, paying patients. But hitches as the law rolled out, including a Supreme Court decision that allowed states to opt out of the Medicaid expansion and a troubled launch of the marketplace websites, threw doubt on whether those gains would materialize.

Well, those hitches seem to have resolved themselves just fine. In the meantime, hospital consolidation continues to be a major factor keeping U.S. health care prices high. Obamacare supporters may have hoped that large chains would repay the U.S. for their new patients by lowering costs, but these benefits have yet to materialize.

Essentially what the ACA did was dump a bunch of new customers into a highly dysfunctional system currently rigged to maximize the profits of big hospital chains. The marginal new access patients gained is in itself a good thing, but it does nothing to solve the long-term problems driving the U.S. into bankruptcy.

Our best hope for lowering costs as well as improving quality is medical technology that allows care to be delivered more efficiently and cheaply. That, and not just simply expanding access, is where U.S. health care policy should look.

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  • Boritz

    “Our best hope for lowering costs as well as improving quality is medical technology that allows care to be delivered more efficiently and cheaply. ”

    It seems like technological advances in medicine mostly drive prices up. The latest chemo works better but costs way more. A CAT scan costs more than x-rays. There are definitely advances that lower costs but they seem to be overwhelmed by the best treatment (and diagnostics) available costing way more than the former best. Critics of ACA say that many patients will be offered only the older/less expensive regimen as a cost control. The NHS does this routinely.

    • Andrew Allison

      I think that what TF means by “medical technology” is not new medical technology, which as you point out has questionable cost-benefits, but the application of IT to make the delivery of care less costly. Examples which have frequently been alluded to here are digitized records, remote care, etc. The other necessary step is to break the stranglehold which the medical guilds have on the delivery system. The rabid opposition to increased utilization of NPs is just one example of how costs are being kept artificially high. The third rail, er leg of the stool, is insurance. Not only do private insurance companies skim off four-or-more times as much of the premiums as Medicare as overhead, but by most estimates, dealing with them represents about 25% of the practitioners’ costs. This is completely nuts. We face a very simple choice: continue to make the managements and shareholders of private insurance companies wealthy or provide affordable healthcare. We can’t do both. also outlines some no-brainer ways to reduce costs.

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