Are Health Insurers Bad Negotiators? NYT Article Stirs Debate

by Leslie Small

After the New York Times published an investigation into newly public negotiated rates between hospitals and insurers — and concluded that insurers have "little incentive" to negotiate lower costs — top industry trade group AHIP hit back with a blog post claiming that the article "spotlights a lot of numbers with little context, no clarity for patients, and no insight that helps anyone shop for care."

Background:

• For its investigation, the Times teamed up with two University of Maryland-Baltimore County researchers to comb through negotiated rates published by hospitals under a Trump-era price transparency rule.
• One of the investigation's most interesting findings is that "in many cases, insured patients are getting prices that are higher than they would if they pretended to have no coverage at all."
• The article also asserts that insurers "may not have a strong motivation" to walk away from a bad deal with a health care provider, "given that the more that is spent on care, the more an insurance company can earn."

What industry observers say:

• "Rarely do insurers behave abnormally," weighs in Ge Bai, Ph.D., an associate professor at Johns Hopkins University's Carey Business School and Bloomberg School of Public Health. "Most of their decisions are strategic to maximize profit. When insured patients get worse prices for hospital services [than cash-paying patients], it indicates that the insurance companies may have more to lose when the contracted hospital price is lower than when it is higher."
• But Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, takes issue with the article's implication that medical loss ratio (MLR) requirements create a scenario in which insurers make more money if providers get paid. That misses the point that "very few insurers are actually up against the MLR requirement," he says, which "strongly implies that they do have incentives to reduce costs. They're still in competition with each other."
• Some experts say there's equal blame to be cast on payers and providers for escalating health care prices. "The higher the prices, the higher the premiums; the higher the premiums, the higher the profits," says says Joe Paduda, principal of Health Strategy Associates LLC. "What a great country."

From Health Plan Weekly