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Over the last several years, people have been noticing and becoming vocal about the rapid rise of many drugs. Kaiser Health News reported on various state lawmakers introducing measures to reduce prices (or at least price increases). One state, for example, wants to index prices to those charged in Canada.

Over the last several years, people have been noticing and becoming vocal about the rapid rise of many drugs. Kaiser Health News reported on various state lawmakers introducing measures to reduce prices (or at least price increases). One state, for example, wants to index prices to those charged in Canada.

In the short-term, pharmaceutical companies can fight back through lobbying efforts or threatening to make their products unavailable in certain markets. If the drug prices continue to go unchecked, it seems likely that society will find some sort of solution, either through legislation or through regulation (e.g. allowing importation from Canada).

The New York Times published a troubling article on how some hospitals choose to bill accident victims. Apparently, instead of billing the victims' insurance companies, some hospitals will file a lien on the proceeds from the accident. This practice allows hospitals to charge their full retail price instead of the rates negotiated by insurance companies. Accident victims could be expecting to use the proceeds from the accident for other purposes (e.g. time off of work for recovery). The article describes how some hospitals engage in this practice despite being shown an insurance card by the patient or having patients sign a form upon arrival that commits them to paying out of the accident's settlement.

The New York Times published a troubling article on how some hospitals choose to bill accident victims. Apparently, instead of billing the victims' insurance companies, some hospitals will file a lien on the proceeds from the accident. This practice allows hospitals to charge their full retail price instead of the rates negotiated by insurance companies. Accident victims could be expecting to use the proceeds from the accident for other purposes (e.g. time off of work for recovery). The article describes how some hospitals engage in this practice despite being shown an insurance card by the patient or having patients sign a form upon arrival that commits them to paying out of the accident's settlement.

Hospital spokesmen will defend this practice as simply maximizing their revenue. Yet, especially in cases where the patients shows his or her insurance card and expects his or her insurance to pay, it seems unethical to charge the full retail price. Even showing patients a form to sign upon arrival from an accident without explaining the financial consequences seems dubious. Hospitals who persist in this practice will likely draw the attention of legislators or regulators, similar to how surprise medical billing has garnered enough attention to get banned.

Kaiser Health News published a piece outlining how a public hospital in North Carolina might be sold off, and the article includes some context about how the hospital in question may represent a larger trend. The hospital, New Hanover Regional Medical Center, may be unusual in that it is profitable and has even reduced costs enough to earn a bonus payment from Medicare. Notably, the prospective buyer for the hospital did not earn a similar bonus. Nevertheless, leadership for the hospital wants to sell, supposedly to raise capital for the hospital to remain competitive in the marketplace.

Kaiser Health News published a piece outlining how a public hospital in North Carolina might be sold off, and the article includes some context about how the hospital in question may represent a larger trend. The hospital, New Hanover Regional Medical Center, may be unusual in that it is profitable and has even reduced costs enough to earn a bonus payment from Medicare. Notably, the prospective buyer for the hospital did not earn a similar bonus. Nevertheless, leadership for the hospital wants to sell, supposedly to raise capital for the hospital to remain competitive in the marketplace.

The article notes that consolidation in hospital ownership tends to raise costs for the community, and people also believe that consolidation leads to lower quality. Hence, the sale of the functional hospital would likely hurt the community in the long run in some regards. It is possible that the county owners could use some cash now as they face challenges posed by the pandemic; hence county officials might see this as a solution to some urgent problems and the long-term effects might be far enough away to not worry about. Otherwise, it is unclear why local officials would want to help the prospective buyer further consolidate power within the healthcare market.

Kaiser Health News published an piece about nurses in California complaining that they are being asked to shoulder more burden of care than legally allowed. These are unusual circumstances, and so many might be quick offer hospitals some sort of exemption. However, nurses point out that hospital management is to blame for laying off nurses and not properly preparing for the recent surge. Given that many hospitals suffered tremendous loss of revenue in 2020 and that the pandemic numbers seemed under control in the summer, this criticism raises an interesting policy question of who should pay for preparing for the possibility that a fall (or winter) surge could catch hospitals by surprise?

Kaiser Health News published an piece about nurses in California complaining that they are being asked to shoulder more burden of care than legally allowed. These are unusual circumstances, and so many might be quick offer hospitals some sort of exemption. However, nurses point out that hospital management is to blame for laying off nurses and not properly preparing for the recent surge. Given that many hospitals suffered tremendous loss of revenue in 2020 and that the pandemic numbers seemed under control in the summer, this criticism raises an interesting policy question of who should pay for preparing for the possibility that a fall (or winter) surge could catch hospitals by surprise?

In a normal consumer market, suppliers who correctly anticipate a surge in demand can be handsomely rewarded for their stockpiling (think of the small-time entrepreneurs who guess which toys will be in high demand and will sell out just before Christmas). At the same time, suppliers who guess incorrectly end up losing (in the previous example, perhaps ending up with stockpiles of unwanted toys that they can't sell profitably). Some suppliers might take the risk of stockpiling toys because they think that if they guess correctly, the price will be high enough to cover a few mistakes.

In health care, however, the price of treatment is relatively fixed for a given procedure within a year. So, a hospital administrator looking at pandemic numbers in the summer might be unwilling to extend the hospital's losses by re-hiring nursing staff in preparation for a winter surge that might or might not take place. After all, if the hospital administrator decided to ramp up hiring and the surge never materializes, the hospital could be in for even steeper losses. On the other hand, if the surge does materialize, the upside for the hospital might not be high enough to warrant the financial risk of staffing up. So, the uncertainty around whether the surge will happen has a cost -- who should bear that cost?

Even though many hospitals are non-profit, it seems unreasonable that they should shoulder the cost, especially given that many operate on tight margins and have already suffered severe financial losses. The current situation is that nurses essentially bear the cost of the uncertainty by having to work extra; that too seems like a wrong result. If government could have moved fast enough earlier on, perhaps the best result would have been for the government to have subsidized preparation for the surge; after all, it is a public health matter and the government has subsidized other industries such as movie theaters and airlines.

There has been a lot going on recently in the nation's political scene. One point of political drama was the most recent round of relief payments for the pandemic. Buried in the surrounding controversy is that Congress addressed surprise medical bills -- an issue so popular that it garnered bipartisan support. The legislation takes effect in 2022 and patients will be protected from what's known as balance billing in cases of emergency care and when they are unknowingly treated by an out-of-network physician. There are some caveats. For example, patients can waive their protection against surprise medical billing under certain circumstances (with enough lead time).

There has been a lot going on recently in the nation's political scene. One point of political drama was the most recent round of relief payments for the pandemic. Buried in the surrounding controversy is that Congress addressed surprise medical bills -- an issue so popular that it garnered bipartisan support. The legislation takes effect in 2022 and patients will be protected from what's known as balance billing in cases of emergency care and when they are unknowingly treated by an out-of-network physician. There are some caveats. For example, patients can waive their protection against surprise medical billing under certain circumstances (with enough lead time).

An interesting component of this legislation is how the bill is resolved between the provider and the insurance company. This legislation gives the problem to arbitrators, but excludes prices on either extreme from consideration: chargemaster prices (essentially "list prices"), which would favor providers, and Medicare and Medicaid rates, which would favor payers. Arbitrators can consider in-network prices, which might reduce the pressure for some payers to enroll more providers in their network.