With New UC-Berkeley/AG Report, Advocates Urge Bills to Prevent Health Consolidation and Higher Health Prices

With UC Berkeley’s Petris Center and Attorney General Xavier Becerra releasing a new report today showing rapid consolidation of California's health care industry driving higher prices in concentrated markets, health and consumer advocates urged legislative action on health care costs, including on two bills to directly address the issue of undue concentration in California's health system.
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>For immediate release: Monday, March 26, 2018

For more information, contact:
Anthony Wright, executive director, Health Access California, 916-870-4782 (cell); or Mike Roth, 916-444-7170

AS NEW UC BERKELEY REPORT SHOWS  INCREASED HEALTH CARE INDUSTRY CONSOLIDATION DRIVING HIGHER PRICES, CONSUMER ADVOCATES URGE LEGISLATIVE ACTION

– INCLUDING GREATER OVERSIGHT OF HEALTH PLAN MERGERS AND HOSPITAL OLIGOPOLIES

* AB 595 (Wood) Gives Department of Managed Health Care (DMHC) Increased Authority to Ensure Mergers Are Good for Consumers, and Increased Ability to Reject Mergers that Adversely Impact Competition

* SB 538 (Monning) Would Limit Large Hospital Chains From Using Oligopolistic Market Power to Drive Up Health Care Costs; UC Berkeley Study Shows Hospital Inpatient Costs 79% Higher in California’s Concentrated Markets

SACRAMENTO, CA—With UC Berkeley’s Petris Center and Attorney General Xavier Becerra releasing a new report today showing rapid consolidation of California’s health care industry driving higher prices in concentrated markets, health and consumer advocates urged legislative action on health care costs, including on two bills to directly address the issue of undue concentration in California’s health system.

One bill, AB 595 (Wood); would increase oversight over health plan mergers. Another bill, SB 538 (Monning), would limit the ability of large hospital chains to insert anti-competitive clauses in their contracts with insurers and other purchasers.

“This report shows not just how consolidated California’s health system has become, but how consumers are paying significantly higher prices for health plan, hospital, and physician services as a result. California policymakers need to act immediately to stem both the increasingly rapid consolidation of our health system, and the increasing prices in our state’s already concentrated markets.” said Anthony Wright, executive director of Health Access California, the statewide health care consumer advocacy coalition. “Bigger is often not better for consumers, whether we are talking about hospital chains or health plans or physician groups. We need legislative action this year against this trend to further consolidation and ever-increasing health care prices.”

HEALTH PLANS: “The state must be able to scrutinize mergers and ensure they are actually good for patients and the public interest. AB 595 protects the millions of Californians who could be negatively affected when a health plan seeks even more market power,” said Wright. AB 595 strengthens the Department of Managed Health Care’s (DMHC) oversight over health plan mergers by: requiring health plans seeking to merge to get prior approval from DMHC; allowing DMHC to reject mergers that negatively impact competition; requiring health plans to get better if they are allowed to get bigger with regard to improving quality and reducing health disparities; ensuring the merged entity can comply with all of the consumer protections in Knox-Keene Act (financial solvency, access to care, network adequacy, handling of consumer complaints, claims processing, etc); and increasing transparency and public participation in the merger review process.

HOSPITALS: “The report shows inpatient hospital prices are 79% higher in California’s concentrated markets. SB 538 would limit large hospital chains’ anti-competitive practices that lead to higher prices.” said Wright. “Employers, insurers, and ultimately consumers all are paying much more in premiums or hospital care, not because of the cost or quality of care but just because of the market power of the hospitals in the region. It’s high time for policymakers to put some public oversight on the practices and prices of our hospitals, and the health industry as a whole.”

The UC-Berkeley report’s executive summary concluded, “In sum, the pace of market consolidation in California has increased significantly. The vast majority of counties in California warrant concern and scrutiny according to the DOJ/FTC Guidelines. Consumers are paying more for health care as a result of market consolidation. It is now time for regulators and legislators to take action.”

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