Hospital prices in Michigan have risen nearly 25% between 2017 and 2020. It’s time to do something before this medical inflation does incredible damage to the state’s economy.
To be clear, these are not rural or safety net hospitals, as they should be treated differently. These are large hospitals and health systems that drive up commercial prices at rates that are double or more than what Medicare pays.
Health insurance is a hidden tax for any company or individual who has to pay it. For businesses, the cost of health benefits impacts hiring and salary decisions, investments, and the ability to attract and retain talent. Individuals pay more out-of-pocket expenses as prices rise, resulting in lower household incomes. Simply put, the average worker has taken a pay cut over the past decade due to rising health care costs. The question touches everyone’s bottom line.
The Medicare Payment Advisory Commission (MEDPAC) has repeatedly reported, year after year, that Medicare pays efficiently administered hospitals very close to what is needed to cover costs. of a hospital. Note that most hospitals in Michigan are nonprofit. Many Michigan hospitals have proven themselves to be well-run facilities, but the broken market allows hospitals to charge significantly higher prices at will. Hospitals, like all businesses, deserve to be profitable; However, when hospital profitability comes at the expense of all Michigan industries, as well as the ability of state and city governments and schools to provide services, we must address it. Employers deserve better, workers deserve better and taxpayers deserve better.
In 2017, Michigan recorded some of the lowest hospital prices in the country. Lower hospital prices have made the difference in attracting and retaining business investment in the state. But with the 25% rise in hospital prices, the state is much closer to the pack and no longer has the competitive advantage over neighboring states.
In 2019, an auto executive was talking to a business leader in Indiana and said, “We have plants all over the country, and every time we talk about opening a new one, do you know what I am saying ? I say, ABI. What is that ? ABI? Everywhere except Indiana. On average, we pay $2,200 for every ER visit in Indiana. In Michigan, it’s $800. The difference is the profit margin of a car. »
Now the advantage is gone and Indiana has just attracted a state-of-the-art battery manufacturing plant. Indiana lawmakers saw the difference and heard this quote in 2019 and took immediate action. Michigan policymakers must attack and resolve this issue with the same sense of urgency that Indiana has. When it comes to hospital pricing, this is one area where it’s best to be at the bottom of the list.
Bret Jackson is the president of the nonprofit Economic Alliance for Michigan, which provides health benefits to approximately 900,000 people. He is active in health care and patient safety advocacy.