Continuing a theme developed in my blog post last month, New York State is providing us with a cautionary tale about what happens to healthcare costs as policymakers look away from the real drivers. Over the last several years, the New York State Assembly has actively pursued “single-payer” as the potential panacea to rising health care costs. And while Albany debates the measure, New York State healthcare costs exploded higher with a 6.4% annual average increase in per-member costs over the four-year period of 2013–2017 according to the New York State Health Foundation; over 50% higher than the national average of 4.2% during that period.
So, what you might ask is so unique about New York that is driving much higher prices? Is it that the for-profit insurers are greedier in this state than in others? Or is medical malpractice litigation a bigger business in the Empire State? The answer is quite clear to anyone who lives in the state and has seen dramatic increases in the unit costs of medical services. New York has had an outsized amount of healthcare consolidation with many hospital systems merging and then gobbling up large physician groups. Study after study indicates that consolidation results in higher consumer costs. As a result, the New York State Health Foundation study specifically cites the increases in prices of physician visits and inpatient services as primary drivers.
Once again, it’s abundantly clear to anyone who is intellectually honest that at the heart of our healthcare cost issue are the prices for services. Single-payer can provide a theoretical channel to reduce prices (after the impossible task of transitioning our employer-paid system to a tax-based system) but the ones who will ultimately pay the heaviest price if we actually reduce costs will be the providers – doctors, hospitals, device and drug manufacturers. Broadening the risk pool won’t do it. Socializing private insurers’ profits won’t do it. Removing state lines won’t do it. In the absence of this conversation, it simply will never happen.