A Race to the Bottom

Philip Betbeze, for HealthLeaders Media , January 13, 2012
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That panel would be empowered to force an insurer to accept a hospital's price or to force the hospital to accept a lower price, according to the newspaper. Given the pressure on governments and just about everyone else from high healthcare costs, which of the two outcomes do you think is likely to occur in most cases? It sounds like an idea that should work, but then again—and I concede that this is probably an unfair comparison—so does communism.

Granted, the story goes on to mention that the panel sees this action as a "near-term" solution to address "unjustified" provider price variation, whatever that means. I don't know about you, but I read near-term as code for desperate and unjustified as expensive in a state that is spending—for a variety of unpredictable and very predictable reasons—vastly more on its universal healthcare plan than it ever imagined.

Excuse me for extrapolating Massachusetts' grand experiment with what we're undergoing more slowly on a national scale, but the structural similarities between the two lead one to believe that many of the same problems eventually will crop up nationally.

Bluntly, this plan sounds suspiciously like rate-setting. We tried, as a nation, a very crude form of healthcare rate-setting in the Nixon administration, when healthcare wages and prices were frozen. That failed miserably.

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