The Association Between Hospital Concentration And Insurance Premiums In ACA Marketplaces.

Keeping the Affordable Care Act's health insurance Marketplaces financially accessible is critically important to their viability. While the relationship between the number of insurers and Marketplace premiums has received widespread attention, the role of hospital market concentration on premiums has been understudied. We examined the relationship between hospital market concentration and Marketplace insurance premiums in the period 2014-17, the extent to which the number of insurers modified this relationship, and whether community-level characteristics were associated with varying levels of concentration. We found that areas with the highest levels of hospital market concentration had annual premiums that were, on average, 5 percent higher than those in the least concentrated areas. Additionally, while an increased number of insurers was independently associated with lower premiums, that was not sufficient to offset the effects of increased hospital concentration on premium costs. Communities with lower socioeconomic status (as measured by median income) were more likely to have higher hospital market concentration. However, this was not consistent across all measures of socioeconomic status, such as measures of unemployment, use of the Supplemental Nutrition Assistance Program, and education. These findings help underscore the importance of exploring antitrust policy and other efforts that may reduce hospital concentration and help keep Marketplace premiums affordable.

The Net Present Value and Other Economic Implications of a Medical Career.

College graduates' career choices are driven by a complex mixture of factors, one of which is economics. The author comments on the report by Marcu and colleagues in this issue, which focuses strictly on the economics of this decision. Specifically, Marcu and colleagues modeled career choices as long-term financial investments in human capital, which consists of the knowledge and clinical skills physicians gain in undergraduate and graduate medical education. They distill the numerous factors that shape the economics of career choice into a commonly used criterion for long-term financial investments of any kind-namely, the so-called net present value (NPV) of the investment. For them, that investment is the decision to pursue a medical career rather than the next best nonmedical, alternative career. This NPV calculation determines the increase or decrease in wealth, relative to that of the next best alternative career, that a college graduate is thought to experience as of the moment she or he enters medical school simply by choosing a medical career rather than the next best alternative. Marcu and colleagues use this human capital model to explore how different plans to finance a medical school education impact the NPV, all other parameters being equal. The author of this Commentary explains in layman's terms how the NPV is calculated and then raises a number of other issues concerning the economics of a medical career, including medical school tuition, residents' salaries, and investments in human capital as tax deductible.

The many different prices paid to providers and the flawed theory of cost shifting: is it time for a more rational all-payer system?

In developed nations that rely on multiple, competing health insurers-for example, Switzerland and Germany-the prices for health care services and products are subject to uniform price schedules that are either set by government or negotiated on a regional basis between associations of health insurers and associations of providers of health care. In the United States, some states-notably Maryland-have used such all-payer systems for hospitals only. Elsewhere in the United States, prices are negotiated between individual payers and providers. This situation has resulted in an opaque system in which payers with market power force weaker payers to cover disproportionate shares of providers' fixed costs-a phenomenon sometimes termed cost shifting-or providers simply succeed in charging higher prices when they can. In this article I propose that this price-discriminatory system be replaced over time by an all-payer system as a means to better control costs and ensure equitable payment.