37° Good Morning
37° Good Morning

Study: Hospital networks also driving up health costs

Don't blame only insurers for rising health care costs, a study in the journal Health Affairs says.

California's hospital fees surged an average of 10.6 percent a year from 1999 to 2005, more than twice the national average, as the state's biggest hospital networks began to demand higher rates from insurance companies, according to the report released yesterday.

By exerting their market clout, the systems led by the five University of California medical centers may be as responsible for cost inflation as Kaiser-Permanente, the nation's largest health maintenance organization, the study said. In the same period, state lawmakers passed regulations that made it difficult for insurers to cut off subscribers' access to doctors and hospitals, no matter their fees.

"Health insurers have been squarely in the crosshairs, blamed for the high cost of private insurance while the role of growing hospital and physician market power has escaped scrutiny," said Robert Berenson, a study co-author and researcher at the Washington-based Center for Studying Health System Change and the Urban Institute.

As President Barack Obama met with a bipartisan panel on a proposal that focuses on restricting the insurance industry's clout, Berenson, who worked on Medicare for President Bill Clinton, said putting a leash on insurers may not be enough.

Policy makers must rein in "growing provider market strength," the study's authors said, recommending that all-payer rate-setting and similar direct regulatory approaches be considered. An all-payer system is one in which all insurers use the same fee schedule, set after examination of the underlying costs for hospitals and doctors.

A move by a WellPoint Inc. subsidiary in California to raise premiums by up to 39 percent prompted congressional hearings Wednesday at which the insurer's president, Angela Braly, testified rising provider costs are a reason for the increase.

American Hospital Association general counsel Melinda Hatton called the study in Health Affairs "far from convincing." The study was funded by the nonprofit California Healthcare Foundation.


We're revamping our Comments section. Learn more and share your input.