The power of purchasing…

Lots of coverage today about a new report by CALPERS and the Pacific Business Group on Health, about the costs of hospital care. There’s articles by Lisa Girion in the Los Angeles Times, Barbara Feder Ostrov in the San Jose Mercury, Victoria Colliver in the San Francisco Chronicle, and Gilbert Chan in the Sacramento Bee. Fascinating stuff, about the wide range of hospital charges between and within regions, and how hospitals largely charge “what the market can bear.”

The study goes to one of my main points: in health care, charges are much more about purchasing power than the cost of care. An individual, with little market power, pays more for prescription drugs, hospital bills, and insurance that groups, and the bigger the group and the bigger the bargaining power, the less care costs.

What’s the implications for health reform?
* This is why AB x1 1 has a purchasing pool–bigger than CALPERS–to negotiate the best possible deal with insurers and drug companies.
* Studies like this also point to the need for transparency–to identify the problems that we need to solve problems. PBGH was active is helping support the transparency language in the bill.

Health Access California promotes quality, affordable health care for all Californians.

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