U.S. Markets closed

Pete Buttigieg's Path to Lower Hospital Prices

The Fiscal Times Staff

Medicare for All and Elizabeth Warren’s plan to finance such a system have dominated the health-care debate in recent days, but it’s not the only proposal out there to expand coverage and bring down high medical costs in the U.S.

At The New York Times’s Upshot, reporter Margot Sanger-Katz looks at Pete Buttigieg’s plan for reining in hospital prices, a key part of any plan since hospitals are the largest component of health-care spending.

“The real problem in the last years is not that Medicare is not able to control prices, but that the private sector is not able to control prices,” Gerard Anderson, a professor at Johns Hopkins, tells Sander-Katz.

Where Warren’s plan would have the government sharply reduce payments to doctors and hospitals, Buttigieg’s plan takes aim at those costs in a less direct way. Buttigieg, the mayor of South Bend, Indiana, who has risen in Democratic primary polls lately, has put forth a “Medicare for All Who Want It” plan that proposes to create a public insurance option to compete with private insurers.

Sanger-Katz explains:

“It would allow insurers and medical providers to agree on whatever prices they wish in a contract. But it would limit how much insurers have to pay when providers are ‘out of network.’ The limit, double what Medicare pays them, would help patients who end up at a place that is not covered by their insurance. But it will also tend to influence the negotiations between hospitals and insurance companies, putting downward pressure on in-network prices. ...

“Currently, most hospitals charge insurers around double the Medicare price, but some charge more. ‘You’re lopping off the top tail,’ said Matthew Fiedler, a fellow at the Brookings Institution, who has been studying similar pricing rules in other contexts. He said the strategy would be particularly useful for services related to medical emergencies.”

Sanger-Katz notes that the idea of explicit price regulation, once out of the political mainstream, has grown more popular as prices continue to rise. But there’s sure to be plenty of pushback: “Medical providers are sure to dislike a plan with price controls, of course, and are likely to fight this feature of Mr. Buttigieg’s plan with much of the vigor they’re expected to bring to opposing single-payer.”

Read the full story at The New York Times.

Like what you're reading? Sign up for our free newsletter.