Reducing Hospital Spending: Three Policy Options [book]

Hospital care accounts for one-third of total U.S. health care expenditures, which in 2018 totaled $1.2 trillion. Private insurers pay 40 percent of these costs. To address concerns about high and growing health care spending, policymakers have proposed reforms to reduce hospital prices. STUDY FOCUS The authors analyzed three policy options that have been proposed as ways to reduce hospital prices paid by private health plans: regulating prices, improving price transparency, and decreasing
more » ... ntration in hospital markets to enhance price competition. Prices could be regulated by setting prices or capping prices. Setting prices at a given rate means that prices above that rate are reduced, while prices below that rate are increased-which offsets some of the savings. Capping prices puts a ceiling on prices without raising prices below the cap. Improving price transparency could help patients, employers, and health plans shift care toward less expensive hospitals and could put pressure on hospitals to reduce prices. Decreasing hospital market concentration reduces hospital market power to drive prices toward competitive levels. KEY FINDINGS
doi:10.7249/rba805-1 fatcat:ij6p4kzlavcg7n6fnnoqwt3hwu