Hospital-Owned Insurers reshape Medicare Advantage: benefits, cost risks and competition concerns
Researchers have documented the rise of hospitals that also run Medicare Advantage plans, noting both improved care coordination and potential financial and competitive drawbacks.
A new database identifies 2,190 hospitals that also own Medicare Advantage plans, representing nearly one-sixth of the program’s participants. Proponents argue that combined ownership streamlines communication, reduces administrative hurdles, and leads to better patient experiences, including fewer readmissions and surgical complications. However, analysts raise concerns that hospitals might encourage additional diagnoses to increase risk-adjusted payments and could exploit medical loss-ratio regulations by inflating prices paid to their own facilities.
Comparative pricing shows affiliated plans are on average about 5% higher than competing plans, though this may reflect sicker patient populations or strategic pricing. There is also evidence that some hospitals charge rival insurers more, potentially raising premiums for those plans. The extent to which these practices affect overall government spending and market competition remains uncertain, prompting calls for further study.
Why it matters
Hospital-insurer integration could change Medicare costs, patient care quality, and market competition for millions of seniors.
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