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Analysis: How your beloved hospital helps to drive up health care costs

Elisabeth Rosenthal, Kaiser Health News on

Published in Health & Fitness

As voters fume about the high cost of health care, politicians have been targeting two well-deserved villains: pharmaceutical companies, whose prices have risen more than inflation, and insurers, who pay their executives millions in salaries while raising premiums and deductibles.

Although the Democratic presidential candidates have devoted copious airtime to debating health care, many of the country's leading health policy experts have wondered why they have given a total pass to arguably a primary culprit behind runaway medical inflation: America's hospitals.

Data shows that hospitals are by far the biggest cost in our $3.5 trillion health care system, where spending is growing faster than the gross domestic product, inflation and wage growth. Spending on hospitals represents 44% of personal expenses for the privately insured, according to the Rand Corp.

A report this year from researchers at Yale and other universities found that hospital prices increased a whopping 42% from 2007 to 2014 for inpatient care and 25% for outpatient care, compared with 18% and 6% for physicians.

So why have politicians on both the left and right let hospitals off scot-free? Because a web of ties binds politicians to the health care system.

Every senator, virtually every congressman and every mayor of every large city has a powerful hospital system in his or her district. And those hospitals are as politically untouchable as soybean growers in Iowa or oil producers in Texas.

 

As hospitals and hospital systems have consolidated, they have become the biggest employers in numerous cities and states. They have replaced manufacturing as the hometown industry in a number of Rust Belt cities, including Cleveland and Pittsburgh.

Can Kamala Harris ignore the requests of Sutter Health, Kaiser Permanente, UCLA or any of the big health care systems in California? Can Elizabeth Warren ignore the needs of Partners HealthCare, Boston's behemoth? (Bernie Sanders may be somewhat different on this front because Vermont doesn't have any nationally ranked hospitals.)

Beyond that, hospitals are often beloved by constituents. It's easy to get voters riled up about a drugmaker in Silicon Valley or an insurer in Hartford. It's much riskier to try to direct their venom at the place where their children were born, that employed their parents as nurses, doctors and orderlies, that sponsored local Little League teams, that was associated with their Catholic Church.

And, of course, there's election money. Hospital trade groups, medical centers and their employees are major political donors, contributing to whichever party holds power -- and often to the out-of-power party as well. In 2018, PACs associated with the Greater New York Hospital Association, and individuals linked to it, gave $4.5 million to the Democrats' Senate Majority PAC and $1 million to their House Majority PAC. Its chief lobbyist personally gave nearly a quarter of a million dollars to dozens of campaigns last year.

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