Flawed Paper Attempts to Link Hospital Concentration and Price

A report released last month used commercial claims data from United Healthcare (United), Aetna and Humana to reach a number conclusions about hospital prices and concentration. The paper is badly flawed and the assertions made about hospital market structure and prices, in particular, should be viewed as unreliable for a number of reasons.  The data used are old (2008-2011) and predate the effects of public and some private payers shifting to value-based payments. Here are a few key issues with the study:

• There are no claims data from the Blue Cross Blue Shield plans even though they dominate the insurance market in at least 40 states and even more numerous metropolitan areas.
• The commercial claims data used in the study are from just three insurance companies, one of which, Humana, has only 30 percent of its enrollment mix in commercial products.
  • To illustrate the distortions attributable to this severely limited data set, consider the impact on just two states mentioned in the paper.  According to the most recent American Medical Association data for:
    • Colorado -- half of the markets (MSAs) are dominated by plans other than United, Aetna or Humana.  Neither Aetna nor Humana is listed as either the first or second largest insurer in the state.
    • Minnesota -- the Blue plan dominates every market and Medica is listed as number two. 

For a more in-depth analysis on the report by a leading health care economist click here.