Talking Points: 17 July 2023

A quick roundup of the issues driving the healthcare reform conversation.

Item of the Week

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NONPROFIT HOSPITALS Nonprofit hospitals come under increased scrutiny to justify their billions in tax breaks.

Quick takeaway: More than a dozen states have passed or are considering legislation aimed at better defining charity care, increasing transparency about the benefits nonprofit hospitals provide, or setting minimum financial thresholds for charitable work in communities.

Further context: As previously covered in this newsletter, the issue stems from growing discontent over hospitals’ failure to provide charity care commensurate with the tax breaks they benefit from.

What it means: The issue has only picked up steam as consumers’ medical debt has skyrocketed.  Last year, it was estimated that as many as 100 million Americans – including 41 percent of all adults in this country – are now saddled with some form of medical debt.

Making matters worse are the growing reports of hospitals’ aggressive bill-collection tactics, many of them deployed by these nonprofit health systems.

PRIVATE EQUITY Medical price increases are being driven by private equity investments.

Quick takeaway: A new study shines a spotlight on the impact that private equity interests are having on our healthcare cost curve.

Digging deeper: According to the research, private equity firms are rapidly acquiring physician practices and boosting prices in an array of specialties.  Among the conclusions:

• Private equity acquisitions are increasing – more than six-fold between 2012 and 2021.
• Private equity firms are consolidating and amassing high market share in local physician practice markets.
• Private equity acquisitions are associated with price and expenditure increases.

What it means: Perhaps chief among the study’s takeaways is that increased attention is urgently needed to address how private equity interests are impacting competition, costs, and access, as already seen in specialties, like anesthesiology, and in rural communities across the country.

HEALTHCARE SPENDING Annual healthcare spending now sits at more than $6,000 per person.

Quick takeaway: With healthcare costs on the rise, a new report from the Health Care Cost Institute (HCCI) puts a fine point on how those rising costs are affecting consumers’ bottom lines.

Digging deeper: Between 2017 and 2021, median healthcare spending increased by 24 percent, when it reached $6,139 per person.  That spending increase was driven primarily by rising medical prices, with overall spending growth reflecting a 9 percent increase in prices and a 14 percent increase in utilization.

What it means: According to HCCI, healthcare costs “depend a great deal on where you live, the result of market dynamics like prices, practice patterns, and competition.”

The data shows that market consolidation continues to wreak havoc on medical prices and overall healthcare spending.  In fact, in 2021, most hospital markets lacked competition, and two-thirds of the 183 metropolitan areas studied became less competitive over time.

MEDICARE ADVANTAGE New data reinforces the critical role that Medicare Advantage (MA) plays in the lives of beneficiaries.

Quick takeaway: A pair of new reports adds to the growing body of research underscoring the value of MA compared to traditional Fee-for-Service (FFS) Medicare.

Digging deeper: According to the two reports:

1. MA enrollees are more likely to be socioeconomically disadvantaged than FFS enrollees.
2. Health-related social needs, such as food insecurity or social isolation, are largely prevalent in MA enrollees.

What it means: With an emphasis on coordinated care and enhanced benefits structure, MA plans are uniquely positioned to meet the challenging health needs of some of the most at-risk, high-need Medicare-eligible patients.  It’s no wonder the program now serves over 30 million Americans – more than half of the Medicare population.

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The Health Action Network includes everyday Americans—families, workers, businesses, patients, providers, neighbors, and friends. We are working together because we support market-based solutions that offer better healthcare choices and help build a stronger economy. The Health Action Network is an Elevance Health, Inc., initiative.