Re:The prices hospitals negotiate with private insurers for ...
by refurb on Sunday August 22, 2021 @10:39AM
(#28265830)
This same proposal actually came up with drug pricing when Trump (and other before him) said the US should just reference the EU.
Many people’s first take is that it’s a terrible idea - it would result in spiraling prices reductions and damage R&D.
But what is really happening is you’re just forcing a single price across a wide group of customers. Prices in the US would fall, but they would go up everywhere else.
This actually happened in the US when Medicaid got “best price” passed - Medicaid has to get at least the best price offered to private insurers, if not lower.
Well when the law was passed, prices actually went up. The reason was that if you offer a price to mid-sized customer A and that forces they same (unacceptably low) price for massively huge customer B, well, you basically tell customer A “tough shit” and just price for customer B. And that’s what happened, prices went up for customer A so they didn’t have to also price the same for customer B.
So it would be an interesting approach - tell hospitals they can charge whatever they want, complete freedom, but it has to be the same price for everyone. They’d quickly find an equilibrium that’s likely lower for many customers and higher for a few.
Many people’s first take is that it’s a terrible idea - it would result in spiraling prices reductions and damage R&D.
But what is really happening is you’re just forcing a single price across a wide group of customers. Prices in the US would fall, but they would go up everywhere else.
This actually happened in the US when Medicaid got “best price” passed - Medicaid has to get at least the best price offered to private insurers, if not lower.
Well when the law was passed, prices actually went up. The reason was that if you offer a price to mid-sized customer A and that forces they same (unacceptably low) price for massively huge customer B, well, you basically tell customer A “tough shit” and just price for customer B. And that’s what happened, prices went up for customer A so they didn’t have to also price the same for customer B.
So it would be an interesting approach - tell hospitals they can charge whatever they want, complete freedom, but it has to be the same price for everyone. They’d quickly find an equilibrium that’s likely lower for many customers and higher for a few.