Recapping and Handicapping the Massachusetts Health Insurance “Market”

Paul Levy

First published 4/13/11 on [Not] Running a Hospital

The fastest way to raise hackles among Massachusetts hospitals, doctors, insurance companies, and even businesses is to suggest that a state rate-setting body would do a better job in setting payment rates between insurance companies and providers than the marketplace. Well, let’s test the proposition about the efficacy of that “marketplace.” Here is a short synopsis of the experience with the dominant insurance company over the last decade.

First, as documented so clearly by the Attorney General, pay above-market rates to the dominant provider system in Eastern Massachusetts, and also to geographically monopolistic smaller hospitals in the state. Transfer hundreds of millions of dollars in extra revenue to the dominant provider, permitting it to become still more dominant by investing in huge regional ambulatory care centers and acquiring physician groups. In so doing, assure an increase in patient volumes away from lower cost facilities and doctors, helping to fuel the rapid increase in health care costs in the state.

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