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High Prices Due to Lack of Competition: Colorado Health Institute Study

A new report from the Colorado Health Institute shows how, when choices in the health care market lag, prices rise.

“I think that what surprised me — it surprised all of us — was just how strong it was, how strong that correlation between competition and price was,” said Emily Johnson, a director at the institute who spent months developing an illustrative matrix.

The institute’s findings also give support to the concerns of health care advocates, increasingly worried that consolidation in both the hospital and health insurance industry are leading to higher prices for consumers.

For instance, the report notes that, while there are 24 hospitals in the Denver metro area, 20 of those are owned by four large health systems — which have also expanded into less-populated areas of the state. And, while consumers along the Front Range generally have robust choice among insurance companies, two of those companies — Kaiser Permanente and Cigna — hold 75 percent of the market.

“There simply is no competition in most markets for hospital services,” said David Blumenthal, the president and CEO of the Commonwealth Fund, a foundation that studies the health care system. “The definition of a market is competition. It doesn’t exist for hospital services.”

The institute’s report suggests four ways to address the problem, some of which the state has already undertaken.

  • The state could embolden insurers to jump into potentially risky markets by helping them pay their most expensive claims — something the reinsurance program that lawmakers approved this year would do.
  • The state could directly increase coverage options by offering its own plan — something lawmakers edged toward this session.
  • The two other options are for the state to be more muscular in how it regulates hospital and insurance prices or to encourage innovation in health care delivery — such as through remote visits with doctors via phone or videoconference, known as telehealth, which could bring more options to rural consumers without actually moving more doctors to rural areas.

Read the CHI report

Source: The Colorado Sun



Contact Alexis Hertel at

(303) 322-2228

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