– What do we know about why healthcare in the U.S. is so expensive? There’s a lot we haven’t known about why healthcare in the U.S. is so expensive. In back, that’s because almost everything we knew received from analysis of Medicare data. Medicare treats about 16% of the population, principally beings over 65. But about 60% of the country gets their coverage from private insurers and they are under 65.

Part of the results of this work has been asking to what increase our understanding of health expands aside from its consideration of the Medicare population is generalizable to the privately safeguarded. This is a hugely important question for policy because we’ve effectively is of the view that the specific characteristics in health expend for the two populations Medicare recipients and the privately insured–are similar so one policy will address both.

We perceived the correlation between spending for the two populations is about 14%. That is particularly, very low. Many of the places that we’ve been using as modelings for the society, based on their low-pitched spending for the Medicare population, are high-pitched spending for the privately insured.

It’s incredibly important to understand why spending on Medicare and the privately insured are different. For Medicare, the amounts of care are the driver. For the privately insured, toll shows the majority of health depleting change.

Medicare rates are set by the federal government. On the private surface, each hospital was participating in international negotiations with each insurer. These private rates are a function of negotiation between two parties. Expanding is a function of toll times sum. On the Medicare side, toll doesn’t really vary, so regions that are expensive–like McAllen, Texas, and Miami, Florida–are expensive to Medicare because they accommodate a lot of care to each patient. They are more likely to choose an MRI. More likely to hospitalize for certain conditions, and they are more likely to introduced cases in an ICU.

On the private surface, lengths vary just as they do on the public surface, but rates vary as well they’re not set by a regulator.

This tells us that the streets to target healthcare spending likely differ for the Medicare population and the privately insured. For Medicare, the goals and targets should be to reduce extravagance sum. On the private surface, we don’t want to see extravagance care, but we really have to target toll.

This is the data taken in 2011

We looked at seven different found that tremendously U.S. and within,  the price of a knee can vary by up to of 17 — the most expensive is 17 as expensive as the least expensive. Within, for a knee, up to of eight. Lower-limb MRIs, when you set aside the of the MRI, don’t have much, as, the most expensive in Miami is nine MRI as the cheapest provider.

A reputation of the hospital can encourage quality price variations

There is a negative return to being low quality. The worst-performing quartile on has about 3% an average-quality. At the other, by U.S. News and report are about 13% other. But it’s a very small relationship considering the scale of we. The that the is hospital power.
Why are some hospitals able to 17 times more than other? Why can one provider 9 times what another does within for the exact same? Because the markets are not functioning effectively.

When they have the opportunity to charge incredibly high prices. Monopoly can extract higher when it comes to negotiations with private insurers. If you are the only provider, you have the chance to get much, then if you were facing meaningful. The advantage is still there in duopoly or triopoly markets.

This study tells us that insurance premiums are so because of the healthcare provider. The to rein in the cost of healthcare services is by targeting the in providers. We can do that by making, these more dynamic, and the monopoly that a lot of healthcare providers have, which has allowed them to raise prices.

The U.S. is an outlier because it is one of the only countries where healthcare is. In most countries, the prices. One of the questions in healthcare is whether the ways that healthcare allow prices to be set through negotiation.


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