Rising hospital prices drive up unemployment

Rising hospital costs result in job losses

What you probably already know: When local hospitals raise prices, local employers have to make cuts to afford the increased health care costs. That, it turns out, means layoffs. A Wall Street Journal exclusive took a look at a new study out Monday by the National Bureau of Economic Research that found that higher health insurance premiums force companies to cut payroll and eliminate jobs.

Why? Hospital mergers are on the rise as organizations struggle with staffing and increased costs. These mergers are often sold to the public as a good thing and promise better care. That generally isn’t accurate though. The quality of care doesn’t improve and costs rise. This new study now shows a direct correlation between hospital consolidation and rising prices, and staffing reductions in the area.

What it means: The study found that as hospital prices went up 1%, so did the percentage of people out of work. In areas where there were mergers that resulted in significant market power shifts, job loss was even steeper. Results were mixed between rural and urban areas. Cities including Seattle, Austin and Tampa were hit hard, as were areas of rural Maine, Idaho and Upstate New York.

What happens now? Expect the presidential candidates to talk about hospital inflation and the dramatic increase in medical costs as politicians take aim at the issue. Federal antitrust enforcers may also block more hospital consolidation deals as the issue gains attention.

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