Wednesday, June 29, 2011

Health insurers could save money by buying hospitals -- but will they pass savings on to patients?

A recent merger between non-profit Highmark (BCBS) health insurer and West Penn, a hospital and health care provider, sounds innovative. Although in other businesses this might violate anti-trust laws, in health care it gives a private carrier the incentive to negotiate salaries with physicians and pay for maintenance of wellness rather than “fee for service”. On the other hand, it breaks a contract with UPMC (University of Pittsburgh) which could lead to out-of-network charges for many patients.

The story broke today in the Wall Street Journal, with Q&A here A paywall subscription may be required.  
The lead story, “Insurer’s Cost-Cut Plan: Buy Hospitals”, by Anna Wilde Mathews, also appeared on the Marketplace page in print June 29.

Also, a federal appeals court in Cincinnati, Ohio has ruled that the individual mandate in Obamacare is constitutional (CNN story).  The case is likely to be headed for the Supreme Court next term.

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