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ACA Agonistes
The Two-Front War on Healthcare Competition

The big Obamacare news today is that Aetna is abandoning most of the public health insurance exchanges after suffering large losses, the latest departure in the ongoing insurer-exodus from the Affordable Care Act and a major blow to the law’s stated goal of creating more choice and competition in insurance markets.

But the hollowing-out of the exchanges isn’t the only way Obamacare is blunting market pressures in healthcare. The law’s costly new mandates have also accelerated hospitals’ race to consolidate. In particular, according to a new study published in Health Affairs, the law is driving physician-owned hospitals into virtual extinction by sharply restricting their access to Medicare and Medicaid and creating massive regulatory obstacles to their expansion:

Given the crucial role of Medicare in hospitals’ survival, the ACA has effectively eliminated the formation of new physician-owned hospitals. Moreover, the ACA has rendered remote the likelihood of significant future expansion of existing physician-owned hospitals that accept Medicare. Expansion is not allowed without approval by the Centers of Medicare and Medicaid Services, which requires a finding of community need based on population growth, occupancy rates, or high Medicaid admissions (since implementation of the ACA, only three physician-owned hospitals have been granted approval to expand).

The stated reason for the law’s discrimination against physician-owned hospitals is that they allegedly disfavor patients who are less profitable, even though this was powerfully disputed by a recent study in the British Medical Journal. Moreover, physician-controlled healthcare providers outperform their corporate-controlled counterparts by a number of metrics. It’s hard not to wonder if part of the rationale for the ACA’s bias against smaller physician-controlled enterprises is that politically connected mega-hospitals were looking to suppress competition.

As Avik Roy has noted, public policy discussions of healthcare typically place a disproportionate emphasis on “the way we buy healthcare” instead of “the way we sell healthcare.” In other words, while the structure of the insurance industry is important, the structure of the hospital market is important as well. Any genuine effort to bring down costs will need a laser-like focus on reversing the trend toward consolidation among hospitals and intensifying competition for insurance money, both private and public. Restoring the vitality of physician-owned hospitals would be an important first step.

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  • Dale Fayda

    Oh, for Christ’s sake, TAI…

    Obama and the Democrats don’t give a flying flip about any of this. Not the cost of insurance, not the cost of healthcare itself, not its availability; none of it. All the earnest gobbledygook in these articles completely misses the Democrats’ main goal – to gain CONTROL of and to NATIONALIZE the healthcare industry, by hook or by crook. All the subsequent negative fallout if irrelevant to them; it will be (and already is) blamed on the “greedy insurance companies”, “obstructionist Republicans”, “not enough spending” and so on.

    No one in the Democrat party believed Obama’s platitudes about ACA making medical insurance more affordable and accessible; the Gruber videos amply prove that.

    As long as they’re in charge of the Federal government, the healthcare industry will continue to get gobbled up the Leviathan state. The Democrats will happily let the chips fall where they may,

    • ljgude

      Another view is that when the lobbyists wrote the bill the big hospitals did a better job of feathering their own nests than the insurance companies. The performance of the health care industry stocks in the market show that they, not the insurance companies, have been the big winners. That pill that got jacked up to $700 a pop was just the tip of the iceberg.

      • Andrew Allison

        The ACA was, as you point out, written by and for big pharma, healthcare providers and the insurers went along because they saw more business. Too bad they didn’t give more thought to what kind of business it would be.

      • Dale Fayda

        The fact that big pharma, et al are currently making out pretty well out of this debacle was and is largely incidental for the Democrats, whose decade-long dream it was to socialize healthcare in the US.

        And even though these players are in the dough now, it won’t last forever, just like it didn’t for the big insurance companies, who idiotically thought that by laying down with dogs (Democrats) they wouldn’t get up with fleas. And now look at them…

        As this dumpster fire of a law continues to tank, other “villains” will need to be found by the Democrats to divert the blame for this historic fiasco away from themselves. Care to take a guess who that might be? I’d bet my last dollar that hospitals, pharmaceutical companies, for-profit healthcare providers and anyone else who’s still making a buck in this industry will bear the brunt of liberals’ legislative punishment. Hillary is making threatening noises in the direction of the insurance companies already. The Democrats will throw the rest to the wolves as well.

        Liberals destroy everything and everyone around them eventually; it’s in their nature. And just like the Soviets shifted the blame for their economic failures onto fictional “wreckers: and “saboteurs”, so will the Democrats re-direct theirs and public’s ire towards these money boys in time.

    • chuck

      The problems with the ACA relate to the concessions made to insurers, pharmaceutical companies, and hospitals, obstensibly to gain more GOP support for the legislation. With full majority in the house, and a party line vote, Obama should have gone all the way and created a single payer socialized system.
      What we have is a healthcare system that I cannot afford to use- we pay insurance premiums, but the last time our family went to hospital, it took sixteen months to pay the bill: we make too much money for financial assistance, but not enough money to afford health care.
      I still do not know what the GOP plan is to fix our broken healthcare system? It is not enough for you conservatives to cry foul and vote to block this legislation, come up with something that works as an alternative.

      • Dale Fayda

        There were at least (2) plans presented by the GOP at the time of deliberations over Obamacare – one from the Senate and one from the House. Both were contemptuously brushed aside as triumphant Democrats were shoving Obamacare forward.

        Also, several of the recent GOP presidential candidates presented their plans as well. If you’re truly interested in finding out what these various plans are, a simple Google search would probably satisfy your curiosity.

        The first step in any “GOP plan is to fix our broken healthcare system” is to sweep Obamare off the table. Only then can the work to repair the damage begin.

        I have NO sympathy for you over your health insurance plight. You voted for it and you got it, nice and hard. You were warned, over and over and over and over by the GOP, with whom you now take umbrage, although it was YOUR side who inflicted this pain on you and your family. I’m betting you’re voting for Hillary too, who will continue to prop up this disaster of a law by any means necessary.

        Besides, aren’t the Democrats still saying that Obamacare is “working”?

        • chuck

          Googled ‘GOP Healthcare Plan’: first hit was the June 22, 2016 proposal from the House, second hit was an article in The Atlantic:
          I’m not sold that this plan will fix anything.
          I never asked for your sympathy, I was just giving anecdotal evidence that the system doesn’t work.
          I would never listen to the GOP warnings about anything (see: weapons of mass destruction).
          I voted for Obama, and was disappointed that he became so moderate.
          I am voting for Jill Stein, so you lost that bet. Yes, I know she won’t win.
          I don’t align with the Democratic party, but yes, Hillary thinks Obamacare is “working” from her lofty perspective.

          • Dale Fayda

            Sucks to be you, doesn’t it? I don’t need your “anecdotal evidence” to know that Obamacare is pile of puke – we told you so when you liberal dopes were still feeling the thrill of Obama’s brilliance in your nether regions.

            Have fun paying your premiums for mandated medical insurance you’ll never get to use, chump. From what I’ve been reading, they’re set to go up substantially yet again.

            Feel the Bern! Ha, ha, ha, ha!

          • chuck

            And Good Luck to you as well, it’s been a real pleasure chatting with you.

  • M Hayne Hamilton

    Unmentioned is the elimination of private phycisians from providing care for their patients while hospitalized. Their inpatient care is provided by a Hospitaler, a salaried employee of the hospital. Some large hospitals have also created a new patient classification of “under observation” . This is a classification in addition to “admitted”, but allows the Hospitaler, who has no prior experience with his patient, to order any diagnostic tests she or he chooses. These tests are performed by the hospital, whether they are needed or not. The medical history in the experience of a patient’s primary care phycisian is lost, and the hospital is in total control of the costs of all evaluations, examinations, diagnostic testing, treatment, medications and length of stay in the care of the hospital, without being admitted. The consolidation of hospitals and the acquisition of formerly independent medical practices by hospitals is rapidly creating a potential health care cartel…..hh

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