Insurers vow to toughen up on hospital prices

Health insurance

TEXT OF STORY

Bill Radke: The government has been getting tougher on insurance companies in the last few months, denying them the giant rate increases they're accustomed to. Now insurers are vowing to get tough on hospitals. From the Marketplace Health Desk at WHYY in Philadelphia, Gregory Warner reports.


Gregory Warner: Ten years ago in Boston, insurance companies learned a hard lesson. When the insurance company Tufts Health Plan refused to pay the larger reimbursements that a group of popular hospitals were demanding, the hospitals responded by refusing to take Tufts insurance anymore. A few days later, Tufts' CEO at the time, Harris Berman, got a call from his biggest customer:

Harris Berman: General Electric, saying they really appreciated the fact that I was trying to hold the line on costs, but unless we got back to the table, they were going to have to switch insurers.

So Tufts crawled back and paid the hospital's price. Since then, hospital prices in the city have almost doubled. This year, Tufts and other insurance companies across the country say they won't back down during contract negotiations so quickly.

COLIN DROZDOWSKI: The tide is changing.

Colin Drozdowski is with the insurance giant Anthem Wellpoint. He says customers know more than they did a decade ago about rising health care costs. He says if hospitals try to freeze insurers out of the network, most customers will stick with their plans and change doctors, rather than see their premiums keep climbing.

In Philadelphia, I'm Gregory Warner for Marketplace.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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