Bret Jackson Suggests Drivers of Michigan's Low Hospital Prices

December 9, 2019

The unique market dynamics in Michigan have contributed to lower hospital prices, but it remains to be seen if recent policy changes will reveal these prices to be artificially depressed, according to Bret Jackson, president of the Economic Alliance for Michigan.

The unique market dynamics in Michigan have contributed to lower hospital prices, but it remains to be seen if recent policy changes will reveal these prices to be artificially depressed, according to Bret Jackson, president of the Economic Alliance for Michigan.

Transcript

In the RAND study comparing hospital prices for privately insured patients to a Medicare benchmark, Michigan’s prices were among the lowest of the states studied and they actually fell during the study timeframe. To what do you attribute that success?

So there’s a number of market dynamics in Michigan that I think contributed to our lower prices. We have a relatively dominant carrier in Michigan, the Blue Cross Blue Shield of Michigan plan, we have Medicaid expansion, certificate of need, we have a relatively low uninsured rate, and so I think all of these things contributed to low prices.

But at the same time, the Michigan legislature just changed the auto no-fault insurance law. The auto insurance companies had been paying charges on an unlimited benefit for a period of time, and that may artificially depress prices. So now that the change is made just a month or so ago, we can see if prices were artificially low and if those prices will change as hospitals try to recoup revenue lost from the auto insurance change.