PRESS RELEASE: NASI Announces New Project on Addressing Pricing Power in Health Care Markets

WASHINGTON, D.C. – The National Academy of Social Insurance announced a new project, “Addressing Pricing Power in Health Care Markets” and the formation of a study panel to evaluate the range of policy options that address the trend towards provider consolidation and its impact on health care spending. This work is made possible with support from the Robert Wood Johnson Foundation (RWJF) and the California HealthCare Foundation (CHCF).

High and rising prices for medical care in the United States contributes significantly to rising healthcare costs and to a level of per capita health spending in the U.S. far greater than in other developed countries. In many local markets, a trend toward consolidation of hospitals and physicians – often sought for greater efficiency and increased quality – may also strengthen market power and allow providers to raise prices. This trend will likely be accelerated by the introduction of new models of care delivery and provider payment created by the Affordable Care Act (ACA) to improve health outcomes and lower costs. Yet, as experienced widely in the ‘90s and today to a more limited extent, under some circumstances health plans are able to obtain the upper hand in negotiations and drive prices down below sustainable levels for certain providers, raising concerns about a system featuring “haves” and “have-not” hospitals.

The study panel co-chairs – Robert A. Berenson, M.D., of the Urban Institute and G. William Hoagland of the Bipartisan Policy Center – will oversee work focused on a wide-ranging and thorough examination of the market-oriented and regulatory policy options to mitigate the adverse effects of pricing power on health care costs. The study panel’s objective will be to thoroughly explore the pros and cons of possible policy approaches and to provide a comprehensive basis for further research, analysis, and policy development.

“Although a number of studies recently have documented changes in local healthcare markets and their impact on price, there has been little work done to explore the range of policy options to respond to rising prices,” said Berenson. “This panel of experts will fill a crucial void and develop a guide for policy makers to minimize the impact that growing pricing power may be having on health care spending,” said Hoagland. The study panel will be announced in July and the final report is expected to be issued in late 2014

Support for this project is provided by grants from the Robert Wood Johnson Foundation and The California HealthCare Foundation, based in Oakland, California.