Research shows hospital mergers contribute to overdoses, suicides
The National Bureau of Economic Research (NBER) published new findings this week that provide insight into some of the true costs of hospital mergers. In many cases, mergers raise the cost of care for communities, and that impacts the cost of insurance, employment stability and public health.
According to the NBER paper, employers face higher insurance premiums as a result of the rising cost of care—in part from mergers—and employers are laying off workers in response. The correlation can be seen at a county level. When a nearby hospital raises prices for services, premiums for employers rise accordingly, causing them to cut jobs.
In turn, those cuts are linked to a rise in homelessness and untimely deaths.
“The increases in unemployment we observe are concentrated among workers earning between $20,000 and $100,000 annually,” the report said. “[We] estimate that a 1% increase in health care prices leads to a 1 per 100,000 population increase in deaths from suicides and overdoses.”
According to the estimates from the NBER, a single hospital merger equates to an average of 39 lost jobs and $6 million in lost wages—and that means less taxable income and more public health expenses for governments. Specifically, each merger caused the cost of care to rise 1.2% nationally on average.
“Likewise, we estimate that the average merger that raised prices by 5% or more would have led to 203 job losses, about $32 million in forgone wages, a $6.8 million reduction in federal income tax revenue, and between 1 and 2 additional deaths from suicide and overdose,” the report stated. “This implies that the aggregate economic harm from an individual merger that raises hospital prices by 5% or more is approximately $42 million.”
Unsurprisingly, a rise of insurance premiums tended to lead to job losses for workers making less than $100,000 annually. The rise in premiums hit workers in middle income brackets the hardest, as they are often ineligible for Medicaid. Those making $20,000 a year or less rarely have employer-provided insurance.
The data used to calculate these estimates comes from the Health Care Cost Institute and insurance premium statistics from the federal government, the NBER said. The group looked at 304 hospital mergers between 2010 and 2015 to develop their correlations.
“In the absence of concrete steps to address healthcare price growth, rising health spending will raise labor costs and reduce business dynamism outside the health sector, put pressure on the federal budget and exacerbate income inequality,” the authors wrote in the paper. “We hope this research motivates future analysis of strategies to address healthcare price growth in the U.S. and ways to screen for and challenge hospital mergers that lessen competition and lead to higher prices.”
The full NBER paper can be found here.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.