New Report Shows Higher Levels Of Hospital Concentration Associated With Higher Insurance Premiums In California

posted by Clare Krusing

on January 27, 2015

For Immediate Release

Washington, D.C. — A new report examining the impact of hospital concentration and premiums in California provides clear evidence that consumers living in regions with many hospital competitors have substantially lower premiums compared to those in regions with highly consolidated hospital markets. The analysis, commissioned by America’s Health Insurance Plans (AHIP), offers a first look at the influence of hospital concentration on the cost of coverage in the new Exchange marketplace.

The report, authored by Scott Thompson, Ph.D. and published in the Antitrust Health Care Chronicle, finds more competitive hospital markets had more than 8 percent reductions in premiums. That translates into savings of more than $20 a month for consumers in markets with less hospital concentration.

With strong market influence, hospital systems can often negotiate higher rates for their services. These findings build on the overwhelming evidence that shows hospital consolidation translates into higher health care costs for consumers and employers.

“Consumers and employers benefit from competitive markets that promote affordability and choice,” AHIP President and CEO Karen Ignagni said. “As this report shows, more needs to be done to encourage competition among providers. Hospital consolidation comes with a price that consumers and employers simply cannot afford.”

Key findings from the report include:

  • Each additional effective hospital competitor is associated with a 1.5 percent drop in the cost of insurance premiums.
  • Consumers in more competitive markets, such as Los Angeles, saw average monthly savings of $32.90 in reduced premiums when compared to consumers purchasing coverage in San Francisco, a market with fewer hospital competitors.

To view the full report, click here.


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