Wednesday, June 08, 2011

Playing Nice

Hospitals and health insurance carriers are more often foe's, not friends. But the lamb has laid down with the lion and the editor at Fierce Health Finance observed something odd and posted his observations.

Duane Dauner, head of CHA (California Hospital Association) expressed his opposition to a bill working its' way through the legislature that would reject any requests for health insurance premium increases deemed . . . "unreasonable".

A law so vague means more political grandstanding than just putting an actual face on the process. Beyond that, any attempt to institute price controls has always proven to be counter productive.

However good their intentions, price controls actually result shortages and higher prices.

Consider this. For years we had a monopoly phone company with prices regulated by the government. Once the monopoly was ended and free markets were allowed to exist consumers had more choices and lower prices.

What the government is attempting to do is end free market competition and force a price controlled monopoly on health insurance.

It won't work.

So why are hospitals specifically against a bill that would limit premium increases?

hospitals in the Golden State spend about $12 billion more a year on Medicare, Medicaid and uninsured patients than they take in. They therefore need to make it up on their patients enrolled in commercial health plans. Hospitals fear that any crimping of premiums will lead to even more wrangling on rates, and exacerbate the problem.

Read that again.

Hospitals in CA LOSE $12 BILLION per year on Medicare and Medicaid patients.

So where do they make up the losses?

Medicare and Medicaid payments are mostly getting smaller rather than larger, creating more pressure to extract optimum revenue from commercial payers, and essentially pitting hospitals against the best financial interests of its patients.

In other words, hospitals need patients with private insurance and they need that insurance to pay more, not less, so they can continue to survive.

It won't get any better under Obamacrap since the underlying precept of the law is to fund health insurance for low income and uninsured through a combination of REDUCED payments for Medicare patients and higher taxes on everyone.
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