Mar 18, 2022 - Health

Hospitals are back in the hot seat for their prices

A health cross with money at its base.
Illustration: Aïda Amer/Axios

Forces in New York City, California and elsewhere are leading a new push to rein in hospital prices, reviving a health cost fight that’s been on hold for most of the COVID-19 pandemic.

Why it matters: Hospital prices vary considerably even in the same market, and rising prices for care are reflected in higher insurance premiums and lost wages.

Driving the news: A union health fund representing service workers in 11 states and Washington, D.C., is calling on New York State lawmakers for help and weighing whether to team up with other labor groups to gain leverage in negotiations with hospitals.

  • The effort drew praise Thursday from New York City Mayor Eric Adams.
  • Colorado employers have already banded together to directly negotiate with local hospitals and insurance companies, according to Bloomberg News.
  • California Gov. Gavin Newsom has called for creating an Office of Health Care Affordability to set limits on hospital, physician and insurer costs -- and fine those that don't comply.
  • Legislators in half of the states have debated transparency bills that, among other things, would force hospitals to disclose prices or in some cases cap cost increases, per the National Academy for State Health Policy.

Between the lines: The focus on hospital pricing is driven by a growing gap between what employers, unions and private insurers pay hospitals compared with what Medicare pays for the same services.

By the numbers: The service workers union’s 32BJ Health Fund on Thursday released a report showing private hospitals in New York City charged it on average 300% more than they charged Medicare for the same services.

  • That gap also affects governments that buy coverage for active and retired employees. The union fund estimated New York City may be overpaying by as much as $2.4 billion.
  • An analysis of pricing trends at 10 major urban health systems contained in the report found major disparities in the cost of some common procedures. The union said a C-section delivery, for example, varied from $27,700 to $55,000 at New York City private hospital systems while costing $17,800 at the public Health + Hospitals system.
  • “Hospital prices are the main driver of our costs and U.S. healthcare spending -- findings that should direct policy change going forward,” the report states.

The other side: Hospitals have long argued that government programs like Medicare pay too little, and that they have to charge privately insured patients more to make ends meet. The pandemic has also disrupted many hospitals’ business models -- for example, by forcing the cancellation of elective procedures.

Our thought bubble: Old health cost fights are resurfacing as the pandemic ebbs, putting political pressure on providers that were hailed as heroes and seen as largely untouchable during the worst of the crisis.

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