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Addressing Skyrocketing Hospital Costs

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DISTRICT COUNCIL 37 EXECUTIVE DIRECTOR HENRY GARRIDO AND 32BJ PRESIDENT KYLE BRAGG PEN OP-ED ON SKYROCKETING HOSPITAL COSTS

Some of the most prominent private nonprofit health systems are driving up hospital costs and worsening the city’s inequality crisis

NEW YORK—District Council 37 Executive Director Henry Garrido and 32BJ President Kyle Bragg co-published an op-ed in Crain’s New York Business detailing the issue of rising hospital costs for working New Yorkers. In the op-ed, they argue that increasing hospital costs leads to more expensive health benefits and worsens the city’s inequality crisis.

The op-ed can be found here and full text is available below.

Out-of-control hospital pricing creates more inequality

The pandemic has rightly focused public attention on racial disparities and on the importance of accessible high-quality health care for all New Yorkers. Unfortunately, health care costs in New York City are among the highest in the country and are now jeopardizing access to care for working people.

Some of the most prominent private nonprofit health systems—such as New York–Presbyterian, Northwell Health, Montefiore Medical Center and NYU Langone—are driving up hospital costs and worsening the city’s inequality crisis.

The pandemic has only exacerbated existing racial inequalities for food insecurity, housing and, most glaringly, health care. For those working-class New Yorkers who have made it through the Covid-19 crisis with their job and health intact, out-of-control hospital pricing threatens their survival.

Due to skyrocketing hospital prices, the total cost for health benefits becomes more expensive each year. It eats up an increasing share of the compensation pie, leaving less and less money for wage increases to support the essential workers who have kept the city running during the pandemic.

There is a common misconception that hospital overcharging comes off the bottom line of insurance companies. For hundreds of thousands of union workers in New York—whether they are the men and women who keep our streets clean or our buildings protected—hospital overcharging comes from their paycheck, one way or another.

Simply put, the prices paid to the large health systems are excessive, out of whack and cannot be justified by any legitimate standard. The health fund covering the city’s residential workers, cleaners and security officers did a study and found that city hospitals were paid on average 2.4 times the Medicare rate for the same services between 2016 and 2019. For example, the 32BJ Health Fund paid NYU 3.97 times the Medicare rate in 2019; paid New York–Presbyterian 3.58 times what Medicare paid in 2019; and paid Northwell 2.99 times the Medicare rate in 2019.

For some services, the 32BJ SEIU Health Fund paid even more. For example, for routine outpatient hospital care, like a colonoscopy, the Health Fund paid an average of $9,426 in 2018 and 2019 at New York–Presbyterian’s Columbia University Medical Center. The Medicare rate for the same time period for the same care was only $1,021, meaning that the health fund paid more than nine times the Medicare rate. Between 2016 and 2019, the 32BJ Health Fund paid a total of $1,322,015,900 for hospital services in New York City. The equivalent cost for the services, had they been paid for by Medicare, would have been only $550,570,480. Thus, the 32BJ Health Fund paid $771,445,420 more than Medicare would have paid for the same services at the same hospitals.

How do the major health systems get away with the high prices? They use their market power and public reputation to structure their contracts with third-party administrators to their advantage. They tightly control which hospitals are included in an insurance provider’s network and prohibit the exclusion of hospitals that have out-of-control pricing. While their tactics do not technically constitute a monopoly, the resulting lack of competition has the same effect on pricing.

The high cost of health care is also exacerbated by the lack of disclosure by the large hospitals and intermediaries such as Empire BlueCross BlueShield and Emblem—which negotiate agreements with health care providers. The agreements are secret. The negotiated rates haven’t been disclosed to us, even though federal law says they should be.

Demanding full transparency and fair pricing from the city’s hospitals is about more than just health funds. Out-of-control hospital pricing affects the city’s economy. The city, much like the country, has challenges ahead of us as we try to bring the economy back. Bringing down unnecessarily high health care costs could be the key to our recovery and would go a long way toward addressing the rising inequality in our city. When we face budget crises in the coming years, we cannot afford to unnecessarily waste billions of dollars.

California, North Carolina and other states are pushing back against predatory pricing. It is time for action here in New York. Neither working-class New Yorkers nor the city’s taxpayers can afford to continue to be shaken down. And public employers, particularly in the midst of the current financial straits, cannot afford to pay such exorbitant prices.

We call on New York City to examine out-of-control hospital pricing. The hospitals must put aside the relentless pursuit of more profit. They should instead prioritize patient care and the overall prosperity of our city. 

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