In U.S. Senate, Yale scholarship gets a public hearing

At a recent hearing of the U.S. Senate’s Finance Committee, Sen. Ron Wyden asked Yale health economist Zack Cooper for his insights into how hospital mergers affect the country’s workforce.

“It strikes me that, for workers, consolidation can mean layoffs go up and wages go down,” said Wyden, a Democrat from Oregon and the committee’s chair. “Is that consistent with some of what you’re seeing in your research?”

Cooper, whose current work explores how the U.S. health-care system impacts the wider economy and economic opportunity for American families, told Wyden that hospital mergers affect workers both within and outside the health sector. They can allow hospitals to raise their prices, increasing insurance premiums, which leads to higher costs for employers responsible for providing their employees with health coverage, he said.

“In the presence of employer-sponsored health insurance, it just makes retaining workers more costly for firms,” said Cooper, associate faculty director at Yale’s Tobin Center for Economic Policy, who testified as part of a five-member panel composed of policy researchers and health care executives. “And when you make retaining workers outside the health sector more costly, what happens [is] they lay off workers.”

And research shows that layoffs harm people’s health, he said, citing research showing that 1 in 400 people who lose their jobs die within a year.

“What really scares me and has been eye-opening over the last couple years when I’ve been looking at this is the health consequences of job separations,” said Cooper, an associate professor of health policy at Yale School of Public Health and of economics in Yale’s Faculty of Arts and Sciences. “[Layoffs] can be fundamentally devastating to your health.”

Throughout the June 8 hearing, Cooper walked senators from both parties through the latest and best academic research on the consequences of hospital mergers, other consolidation in the health-care sector, and rising health spending. The opportunity to share these findings with lawmakers embodies the Tobin Center’s mission to not only produce world-class, data-driven research on policy-relevant issues, but also to expand the impact of that work by regularly engaging with policymakers at the local, state, and federal levels.

And it is evidence that the center’s efforts to engage directly with lawmakers is paying off.

Last year, the center hired Elizabeth (Liz) Jurinka, a health policy expert and former special assistant to President Biden, to help shape and advance its engagement with policymakers on issues relating to health care. To that end, the center is also currently working with administrators of Connecticut’s Medicaid program to use data-driven research to strengthen the state’s public health care system.

Previously, the center supported research by Cooper and Fiona Scott Morton, the Theodore Nierenberg Professor of Economics at the Yale School of Management, which showed that about 20% of patients nationwide who received care at hospitals within their insurance networks were being slammed with unexpected and often exorbitant medical bills because, unbeknownst to them, they had been treated by out-of-network doctors. As a direct result of their work and subsequent engagement with policymakers, Congress passed legislation in December 2020 to protect people from surprise medical bills.

In February 2021, Cooper and Morton launched the “1% Steps for Health Care Reform Project,” which leverages research on the U.S. health system by scholars at Yale and elsewhere to provide policymakers a roadmap for lowering the cost of health care.

During his congressional testimony, Cooper said that about 20% of the 1,000 hospital mergers that occurred over the past two decades have reduced competition and caused price increases. Since the United States relies on employer-sponsored health insurance to cover at least 150 million people, the rise in health premiums has economic consequences far outside the health system, he said.

He pointed to recent research suggesting that the consequences of rising health spending on the privately insured contributes to economic inequality on par with the effects of outsourcing, trade, and automation. He emphasized that consolidation is not limited to hospitals, but is occurring across the health sector, including within the insurance and physician markets, and among pharmacy benefits managers (PMBs) — third-party administrators of prescription drug programs for commercial and public health plans.

Cooper suggested several potential solutions for reducing the consequences of consolidation, including strengthening anti-trust enforcement and enhancing the amount and quality of data available on the health sector. 

“I think at root what we need is an all-payer claims database that gives us detailed information about admissions and discharges, information on provider ownership and critically the ability to measure quality,” he told lawmakers. “I can’t stress that enough. What’s really going to underpin the functioning of health care markets in the U.S. is the ability to measure providers’ quality.”

Sen. Mike Crapo, a Republican from Idaho and the committee’s ranking member, asked Cooper about a third potential solution he had proposed: enacting site-neutral billing in the Medicare program, which would require Medicare to pay the same amount for identical outpatient services regardless of whether they were performed at a hospital, physician’s office, or other facility.

Cooper explained that, lacking site-neutral billing, Medicare pays more for certain services performed in a doctor’s office if a hospital owns the medical practice, which is inefficient and inadvertently incentivizes hospitals to acquire physician practices.

And he had the evidence to back it up; he cited a recent study by the Medicare Payment Advisory Commission which identified numerous services most often performed in doctor’s offices that shouldn’t have higher reimbursement rates if done at hospitals.

“That doesn’t need to be the case,” he told the committee.