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ACA Fail Fractal
Hospitals and Insurers: Caring Is Not Sharing

Hospitals and insurers are making loads of money out of the Affordable Care Act—and many think they aren’t sharing. The LA Times reports on one aspect of the ACA’s pro-industry cronyism. Historically the big health care players defended America’s high medical costs by noting that a large number of Americans were uninsured. When those who were uninsured used the health care system, those who were insured had to pay for this uncompensated care through higher costs.

The ACA was supposed to ease this cost-shifting by having those who were uninsured pay into the system, thereby bringing down health care costs for those who were insured. However, despite the fact that hospitals and insurers have profited enormously from the law, the decline in uncompensated care doesn’t appear to be bringing costs down the way one would expect:

Megan Neuburger, a Fitch Ratings analyst who tracks the for-profit hospital industry, said the turnabout [in profits] has been dramatic.

“I think the Affordable Care Act has been more positive for the hospital industry than analysts had expected or even the industry expected it to be,” she said. […]

Dena Mendelsohn, a health policy analyst at Consumers Union in San Francisco, challenged 6% rate increases by Anthem and Blue Shield of California this year in a report to state regulators. She cited, among other issues, their failure to account for the drop in uncompensated care.

“We were puzzled because they didn’t factor it in,” she said. “The amount of cost shifting should go down.”

For the average American, medical costs are getting more burdensome even as profits shoot up for industry players, a textbook case of pro-business cronyism. The legacy of the Affordable Care Act is still in the making. But it may be that future generations will see it mainly as a law that helped insurance companies and hospitals make more money on the backs of increasingly cash-strapped Americans.

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  • qet

    I continue to be amazed that anyone seriously understands the actual world according to an Econ 101-style model; in this case, as reflected in the notion that provider costs reduced by the elimination of some so-called inefficiency or tax or other obligation will result in a gain to anyone other than the provider. According the The Model, Society, as an Ens Statisticionis, benefits by a reduction in provider costs, therefore (as the simple logic goes), it is always a Social Good to eliminate provider costs. Fine, but the inference that those saved costs will be realized in part by other members of the transactional community is always completely unwarranted.

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