Why is our health care so expensive? It’s the hospitals.

Sure, its fun and easy to villainize insurance companies, but those in the know on the pathologies of America’s absurdly expensive recognize that it is the health care providers– hospitals and doctors’ practices– that are the real drivers of our outrageous costs.

Great piece on the matter from Planet Money.  I especially like how they point out that non-profits can be as money-hungry as any corporation.  I used to have no idea on this until I discussed this with my friend/colleague who does research on Non-Profits.  Anyway…

Last year, when New York Governor Andrew Cuomo was battling to win the Democratic primary, his campaign solicited a donation from the Greater New York Hospital Association, according to a recent report from The New York Times. The hospital lobbying group gave over $1 million to the New York State Democratic Party. And not long after, according to the Times, “the state quietly authorized an across-the-board increase in Medicaid reimbursement rates.” The increase is expected to cost taxpayers around $140 million a year.

The hospital lobby is a juggernaut in New York, as it is in other states. Over the last year, hospital lobbyists have fought reforms for billing transparency in Ohio, minimum nurse staffing levels in Illinois, and cheaper payment rates in North Carolina. [emphases mine] Last month, a leaked email from the Kentucky Hospital Association showed that it was urging members to donate to gubernatorial candidates to “assure access.”

In Washington, D.C., the hospital lobby is battling Medicare for All as well as efforts to end surprise billing, which is when Americans go to in-network providers but then — surprise! — end up getting billed for more expensive, out-of-network services. Three-quarters of Americans say they oppose the practice, and leaders from both political parties have been working to end it. Yet, hospital lobbyists are making reform really difficult. Which is weird, because most hospitals are nonprofits…

“Hospitals are the largest individual contributor to health care costs in the U.S,” Cooper says. Americans spend over a trillion dollars a year at hospitals. That’s about a third of national health spending, which now consumes almost 20% of U.S. GDP. Cooper’s research shows that, after a long period of consolidation, the cost of hospital services has been exploding. Between 2007 and 2014, hospital prices grew 42 percent.

The irony is most hospitals are “nonprofit,” a status that makes them tax exempt. Many (but not all) do enough charity work to justify tax benefits, yet it’s clear nonprofit hospitals are very profitable. They funnel much of the profits into cushy salaries, shiny equipment, new buildings, and, of course, lobbying. In 2018, hospitals and nursing homes spent over $100 million on lobbying activities. And they spent about $30 million on campaign contributions. Health industries have also been funneling hefty sums into dark money groups. But their political power isn’t just the result of lobbying or electioneering. Hospitals are often the biggest employers in states and cities across America.

Forget the insurance companies, this is why meaningful health care reform will be so damn hard (also, plus the insurance companies).  But hospitals are so not the “non-profit” good guys in all this.

About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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