Lawmakers Must Stop Hospitals from Taking Seniors Hostage

The candidates may have changed, but the issues remain. Polling showed President Biden was outperforming President Trump on healthcare by five full percentage points. Now that Kamala Harris has stepped in as the Democratic nominee, the issue is up for grabs.

Healthcare costs getting worse

Healthcare costs are a big issue in the election, according to Pew Research ranking just below inflation and political polarization. Yet neither party seems to be focusing on a major driver of skyrocketing healthcare spending: hospital costs. At over 30 percent of healthcare spending, hospital costs are the largest component. Naturally, this issue is very important to senior citizens who vote with a 72 percent turnout rate and is certainly worthy of attention from our political leaders.

For over thirty years, 60 Plus Association, the American Association of Senior Citizens has been committed to advancing issues that matter most to seniors and their families such as protecting Social Security and Medicare, and ensuring access to affordable, high-quality healthcare.

Over this same time span, hospital prices have increased by 600 percent. A JAMA study found that before the pandemic, hospitals were operating at 2.8 percent margin. But during 2020 and 2021, that more than doubled to an all-time high of 6.5 percent. Since, according to government research, hospital costs make up the largest share of healthcare spending at 30 percent, this is the major cause of rising healthcare costs.

On behalf of the hundreds of thousands of seniors we represent, we are extremely concerned about this troubling trend.

Abusive negotiating tactics

Further, we have observed a distressing nationwide pattern where hospitals use abusive negotiating tactics in order to extract higher payments from insurers in the private sector, where most Americans get their healthcare. We appreciate the recent work of Third Way in reporting on and drawing legislator attention to this trend. This affects the majority of seniors and Americans with disabilities who have coverage through Medicare Advantage, and the three-quarters of low-income Americans in Medicaid who have coverage through managed care plans.

Hospitals are increasingly implementing what their high-priced advisors call an “out-of-network strategy” to get higher payments from employers and consumers. One consultant bragged, “Two of our clients recently leveraged an out-of-network strategy that ultimately resulted in contract rates double the standard annual increase.”

When they negotiate prices with insurers, these ever-growing hospital behemoths leave or threaten to leave the insurer’s network. Notably, hospitals are removing themselves from Medicare and Medicaid networks even when rates in those contracts are not in dispute.

They then take to social media and local news outlets to scare vulnerable patients—like seniors—that access to their favorite doctors and providers will be disrupted. Frightened, they, in turn, “put pressure on the payor” to agree to higher rates in the commercial market. This strategy is cruel, in essence taking seniors and other vulnerable populations hostage and adding unnecessary stress and worry to people already concerned about their health.

Contract disputes becoming more common

Sadly, this is becoming increasingly common. In the third quarter of 2023, public contract disputes with hospitals nearly doubled from the previous year. For patients covered by Medicare Advantage—which is, again, how the majority of seniors access their Medicare benefits—contract disputes in 2022 increased by 115% from the year prior. Experts believe this concerning trend will continue.

Another major factor is that hospitals have consolidated to the point of market dominance in many locations, making it possible for them to force unreasonable increases in their prices. And more and more doctors’ practices are being bought up by large hospital groups. That’s happening because Medicare pays hospitals more than physician offices for the same services, so hospitals are incentivized to buy them, resulting in higher Medicare rates and additional fees on patients.

Healthcare costs could come down with some well-written laws

This rising hospital cost issue is of utmost importance. Recent polling shows that five of the six health-related issues that older Americans found most concerning had to do with healthcare costs. That’s why 60 Plus is calling on Congress to act.

We echo Third Way’s recommendations for policymakers. Lawmakers must take steps to eliminate the incentives that encourage hospitals to consolidate for the wrong reasons and prevent future hospital consolidation through increased antitrust enforcement. And they should ban hospitals from using anticompetitive contracting terms. There is no place in the sensitive healthcare sector for malicious tactics like the “out-of-network” strategy.

Congress must take every measure to protect seniors’ access to affordable care and their peace of mind. And candidates should be talking about it. This should be important to politicians from both parties, as, with senior voters up for grabs, it could decide the outcome of the election.

This article was originally published by RealClearHealth and made available via RealClearWire.