When Hospital Prices Go Up, Local Economies Take a Hit - WSJ
Rising healthcare prices have long eroded American wages. They are doing that by eating into jobs. Companies shed workers in the year after local hospitals raise their prices, new research found. Higher hospital prices pushed up premiums for employees’ health insurance, which businesses help pay for.
The new study, scheduled to be published Monday as a National Bureau of Economic Research working paper, is a comprehensive look at one way companies manage those higher premiums: cutting payrolls. Prices go up for several reasons. Consumers will pay more when they get new technology or more in return, for example. That isn’t the case following many hospital mergers, studies find. Quality doesn’t get better, but prices nonetheless rise.
The new study tracked price changes after roughly 300 mergers of nearby hospitals between 2010 and 2015, using data from three of the nation’s largest health insurers. To measure what happened next to local jobs, the researchers analyzed corporate filings with the Labor Department on fully insured premiums and employee tax records of earnings and unemployment.
The findings: As hospital prices went up 1%, so did the percentage of people who ended up out of a job. The layoffs dealt a blow to their communities. Income-tax revenue dropped and payments for tax-funded unemployment insurance increased 2.5%.
Some local economies got hit harder than others. Where mergers gave hospitals hefty market power as defined by economists and federal antitrust enforcers, hospital prices—and unemployment—increased more sharply.
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