A doctor examines a patient in the emergency room. Photo: Mark Boster/Los Angeles Times via Getty Images

The actual prices hospitals charge private health insurers are closely guarded trade secrets. But a widely circulated health economics paper, which received some new updates, uses actual claims data from three national insurers to show the inner workings of how hospitals get paid.

The bottom line: Hospitals make a lot of money off patients who get their health coverage through their jobs, and hospitals with little or no competition have the power to set their rates at will.

Why it matters: The amount Americans spend just on hospital care represents 6% of the entire economy, so it's important to understand how hospitals price their services and to determine if patients and taxpayers are getting a good deal.

The backdrop: This paper builds on previous work that shows Medicare spending is almost entirely driven by the quantity of services, whereas private insurance spending is driven heavily by the prices and market power of hospitals — an increasing concern as more systems merge into dominant regional and national players.

Updates to the paper and thesis include:

  • "Insurers pay substantially different prices for the same services at the same hospitals," the economists wrote.
  • "Prices at monopoly hospitals are 12 percent higher than those in markets with four or more rivals."
  • "If private prices were set at 120 percent of Medicare rates rather than at their current levels, inpatient spending on the privately insured would drop by 19.7 percent."
  • Many hospitals get paid based on percentages of their charges instead of fixed amounts, and that system "places them under less pressure to reduce costs."

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Two officers shot in Louisville amid Breonna Taylor protests

Police officers stand guard during a protest in Louisville, Kentucky. Photo: Ben Hendren/Anadolu Agency via Getty Images

Louisville Metro Police Department said two officers were shot downtown in the Kentucky city late Wednesday, hours after a grand jury announced an indictment in the Breonna Taylor case.

Details: A police spokesperson told a press briefing a suspect was in custody and that the injuries of both officers were not life-threatening. One officer was "alert and stable" and the other was undergoing surgery, he said.

"Not enough": Protesters react to no murder charges in Breonna Taylor case

A grand jury on Wednesday indicted Brett Hankison, one of the Louisville police officers who entered Breonna Taylor's home in March, on three counts of wanton endangerment for firing shots blindly into neighboring apartments.

Details: Angering protesters, the grand jury did not indict any of the three officers involved in the botched drug raid on homicide or manslaughter charges related to the death of Taylor.

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