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  • March 31, 2022
  • Article
  • Health Affairs Forefront

Two Approaches to Capping Health Care Prices

By: Michael E. Chernew, Maximilian J. Pany and Leemore S. Dafny
  • Format:Electronic
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Abstract

High health care prices for the privately-insured contribute to high premiums, which put downward pressure on wages, and induce employers to reduce benefit generosity and charge employees more for coverage. As the average annual premium for family coverage currently exceeds $22,000, many U.S. states are interested in policies that would lower prices for care. Here, we discuss two strategies to limit health care prices: comprehensive price caps supported by rate review and out-of-network price cap. Both strategies have three key advantages over alternatives such as price-setting: They can preserve a meaningful role for market forces; they minimize disruption to health care markets; and they can be adjusted more easily than other approaches as evidence of their impact emerges.

Keywords

Price Caps; Health Care and Treatment; Price

Citation

Chernew, Michael E., Maximilian J. Pany, and Leemore S. Dafny. "Two Approaches to Capping Health Care Prices." Health Affairs Forefront (March 31, 2022).
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About The Author

Leemore S. Dafny

General Management
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More from the Authors
  • Cigna-Express Scripts: Can a Vertical Merger Rescue an Industry Under Attack? By: Leemore Dafny
  • Giving a Buck or Making a Buck? Donations by Pharmaceutical Manufacturers to Independent Patient Assistance Charities By: Leemore Dafny, Christopher Ody and Teresa Rokos
  • How Do Copayment Coupons Affect Branded Drug Prices and Quantities Purchased? By: Leemore S. Dafny, Kate Ho and Edward Kong
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