Reports by J.B. Kirkwood and Co-Researchers Describe Recent Advances in Medicare and Medicaid (Buyer Power And Healthcare Prices)

Managed Care Weekly Digest

By a News Reporter-Staff News Editor at Managed Care Weekly Digest -- Investigators publish new report on Medicare and Medicaid. According to news reporting from Washington, District of Columbia, by NewsRx editors, the research stated, "One major reason why healthcare spending is much higher in America than in other countries is that our prices are exceptionally high. This Article addresses whether we ought to rely more heavily on buyer power to reduce those prices, as other nations do."

The news correspondents obtained a quote from the research, "It focuses on two sectors where greater buyer power could easily be exercised: prescription drugs covered by Medicare and hospital and physician services covered by private insurance. The Article concludes that the biggest buyer of all, the federal government, should be allowed to negotiate Medicare prescription drug prices. This would likely reduce the prices of many branded drugs substantially without causing a large reduction in innovation. Multiple studies indicate that drug companies have been exceptionally profitable in recent years. As a result, they could lower prices on many drugs and still earn a competitive return on most research and development. Moreover, the incentive to develop important new medicines would remain high because the government would have little leverage over the prices of these drugs. Finally, if problems with innovation develop, payments for new drugs can be increased. In contrast, encouraging large insurance companies to merge does not appear to be a promising way of lowering healthcare costs. While some large mergers may be procompetitive lowering both excessive provider prices and insurance premiums most would present significant competitive risks. They may allow the merged firm to exert monopsony power over small providers, they may create market power and lead to higher premiums, or they may permit the merged firm to gain a discriminatory advantage over smaller insurance companies, threatening downstream competition."

According to the news reporters, the research concluded: "Because of these dangers, it would not be wise, as a general rule, to permit large health insurers to merge."

For more information on this research see: Buyer Power And Healthcare Prices. Washington Law Review, 2016;91(1):253-293. Washington Law Review can be contacted at: Univ Washington School Of Law, Washington Law Review 1100 Ne Campus Parkway 410 Condon Hall, Seattle, WA 98105, USA (see also Medicare and Medicaid).

Our news journalists report that additional information may be obtained by contacting J.B. Kirkwood, Amer Antitrust Inst, Washington, DC 20036, United States.

Keywords for this news article include: Washington, District of Columbia, United States, North and Central America, Medicare and Medicaid, Legal Issues, Health Policy, Medicare.