New Buckeye Institute Report: Lavish Hospital Spending Can Hurt Your Wallet

Posted on May 17, 2024

An interesting new memo from the Buckeye Institute was released that looked at some of the problems with sky rocketing health care costs today.  It used the massive new building project undertaken by the Ohio State University hospital as an example of how health care costs get passed on from the hospital to insurers, who then pass those on to employers and patients.  Here is the crux of the argument:

In sum, hospitals ultimately pass along their capital costs to patients, employers and taxpayers. A recent RAND study found that Ohio hospitals already charge commercial insurers 276.62 percent of what they charge Medicare for the same services, and the Congressional Budget Office found that rising costs get passed on to commercial insurers which “may lead to higher premiums, greater-cost sharing requirements for patients, reductions in the scope of benefits, or other adjustments to plans.” The bigger, more luxurious, and more expensive the facility, the higher costs will rise, and the more plans will need to be adjusted. Patients will face higher premiums and employers will adjust their healthcare plans as hospital prices escalate, all while amenity-filled hospitals never demonstrate or deliver higher quality care.

This doesn’t even mention all of the problems with rising health care costs being passed on from Hospitals.  Much of that cost ends up foisted upon employers.  When faced with rising costs of employment, companies end up passing those costs along to consumers and/or stagnating wages.  So, not only is your cost of health care going to go up, but you also may end up with less money to spend on that health care.

A key question: What, if anything are legislators or regulators going to do about this? To the extent that Washington, DC, is focused on health care, it seems to mostly be concerned about Obamacare (or at least Biden is), repealing the drug price negotiation components of the so-called Inflation Reduction Act (Republicans, but maybe not Trump who has always liked that policy) and rather arcane-to-understand issues like pharmaceutical benefit manager regulation which could serve to drive health care costs up, not down, on the basis that most pharmaceutical benefit managers explicitly exist to save people money on prescriptions. Is anyone in Columbus or DC even looking at this issue?