A report from the White House Council of Economic Advisers suggests that ending “anti-competitive” hospital contracting may lower healthcare costs. The report “develops estimates of the hospital price and health insurance premium reductions that would follow a nationwide ban on all three mechanisms collectively,” a summary of the report explains.
“Anti-steering, anti-tiering, and all-or-nothing bundled contracting are mechanisms by which dominant hospital systems insulate themselves from price competition: anti-steering prohibits insurers from directing patients toward lower-cost providers; anti-tiering is one form of anti-steering that bars insurers from placing the dominant system in a less favorable benefit tier; and all-or-nothing contracting requires insurers to accept every hospital and affiliated physician in the system or none at all,” the report says.
Such a ban would reduce hospital and physician-related costs by 18%.
“After scaling by the hospital and affiliated-physician share of total employer-sponsored insurance (ESI) spending (approximately 57 percent) and applying a 70 percent pass-through rate, ESI premiums in directly affected markets would fall by an estimated 6.5 percent (ranging from 4 to 9 percent),” the summary adds.
American families could save $1,100 to $2,500 each year if ESI premiums fall by an estimated 4% to 7%.
Specifically addressing how these shifts could affect rural areas, the report noted that “multi-market systems may use anti-steering and all-or-nothing contracts to extend urban market power to rural hospitals, elevating prices in those communities.”
“A ban could reduce premiums for rural workers and employers, improve the negotiating position of independent rural hospitals, and impose minimal pressure on system-owned rural hospitals,” the report said.
The Trump administration has also sought to reduce drug prices through TrumpRx. “America was being overcharged for medicine,” the TrumpRx website declares. “The same drugs, made in the same factories, at the same dosages, were costing Americans up to 1000% more than in any other country. This is unacceptable.”
