by Becki Gray
Former Senior Vice President, John Locke Foundation
The US Department of Justice and the Attorney General of NC filed a lawsuit against North Carolina’s largest hospital conglomerate, Carolinas HealthCare System (CMS) this week. The complaint alleges CMS has used their market power to charge higher prices, control access and reduce competition by
“using unlawful contract restrictions that keep commercial health insurers in the Charlotte are from offering patients financial benefits to use less-expensive healthcare services offered by CHS’s competitors. These steering restrictions reduce competition resulting in harm to Charlotte area consumers, employers and insurers.”
According to the complaint, CMS’ revenues for 2014 were $8.7 billion. It holds 50% of the market share in the Charlotte area which includes Cabarrus, Cleveland, Gaston, Iredell, Lincoln, Mecklenburg, Rowan, Stanly and Union counties. Services that are affected are just about any treatment a patient would receive with an overnight stay in the hospital. Medicare, Medicaid and TRICARE patient are not affected, just those of us with insurance. Aetna Health of the Carolinas, Blue Cross Blue Shield, Cigna Healthcare and United Healthcare provide insurance to more than 85% of commercially insured residents in the Charlotte area.
Insurance companies often use a method to direct their consumers to lower cost, but comparable or even higher quality services called steering. Being able to steer their consumers to alternative providers creates competition, leading to lower costs, better services and greater access to care for patients.
However, because of their large market share and ability to impose restrictions on the insurance companies, CMS has been able to prohibit any steering away from their services, creating a monopoly for themselves.
The complaint further states that because of CMS’ control of the market “…individuals and employers in the Charlotte area pay higher prices for health insurance coverage, have fewer insurance plans from which to choose, and are denied access to consumer comparison shopping and other cost-saving innovative and more efficient health plans….” and suggests “competing to offer lower prices and better value than it’s competitors”
CMS says they will fight the lawsuit.
Those paying attention to health care costs know that this lawsuit is not the first incident of a health care monopoly in North Carolina , with price manipulation leading to higher costs, control of the market limiting access and hospital control rather than patient driven health care. North Carolina’s Certificate of Need laws are some of the most egregious in the country. While the courts sort out the allegations against CMS over the next few months (or even years), the General Assembly has an opportunity to repeal Certificate of Need now. House Bill 161 will be heard in the Senate Health Committee on Tuesday and with a commitment from state lawmakers could be enacted during this short session. It is time to end the healthcare monopoly, put patients first in North Carolina and restore health care freedom.