Health Care Mergers and Rising Prices Under Scrutiny in California

March 27, 2018

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Source: Capital Public Radio

Hospital mergers—and the effect of those mergers on medical costs—have caught the eye of California elected officials.

new report from the UC Berkeley Petris Center on Health Care Markets finds a rapid consolidation of health insurance and care providers in the state has raised prices, as it’s decreased consumer options.

“It is clear that the market for health care and health insurance is now highly concentrated in California,” the report concludes. “This has likely reduced the level of competition, which has resulted in higher prices and [Affordable Care Act] premiums in California. The significant variation in prices and ACA premiums across the state suggests regulatory and legislative solutions need to be implemented.”

For instance, the report found treatments for a heart attack ranged from just over $10,000 to about $28,000. Northern California generally had the highest prices and the greatest consolidation in the health care industry.

State Attorney General Xavier Becerra says his office will review the report and could begin scrutinizing health care mergers in the state for anti-competitive practices. The state Assembly also passed a bill in January that would require a state health department to sign off on mergers, before they occur.

Meanwhile, California lawmakers are looking to expand health care benefits, including to immigrants in the country without legal documentation, but how to fund it remains an open question.

A single-payer health care bill foundered in the Legislature last year in part because it never addressed where up to $200 billion a year in state funding would come from. On Friday, Assembly lawmakers began filing proposals—not for single-payer, but to expand coverage through existing options—again, without funding.

UC Berkeley health economist Richard Scheffler, the report’s author, says reining in anti-competitive behavior could help pay for expanded coverage.

“We can begin to get a better deal and better bargain, and use those savings to cover the rest of the citizens in the state of California,” Scheffler says.

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