Emergency Visits Seen Increasing With Health Law

The study, published in the journal Science, compared thousands of low-income people in the Portland area who were randomly selected in a 2008 lottery to get Medicaid coverage with people who entered the lottery but remained uninsured. Those who gained coverage made 40 percent more visits to the emergency room than their uninsured counterparts during their first 18 months with insurance.

The pattern was so strong that it held true across most demographic groups, times of day and types of visits, including those for conditions that were treatable in primary care settings.

The findings cast doubt on the hope that expanded insurance coverage will help rein in emergency room costs just as more than two million people are gaining coverage under the Affordable Care Act. And they go against one of the central arguments of the law’s supporters, that extending insurance to large numbers of Americans would reduce emergency room use, and eventually save money.

In remarks in New Mexico in 2009, Mr. Obama said: “I think that it’s very important that we provide coverage for all people because if everybody’s got coverage, then they’re not going to the emergency room for treatment.”

The study suggests that the surge in the numbers of insured people may put even greater pressure on emergency rooms, at least in the short term. Nearly 25 million uninsured Americans could gain coverage under the law, about half of them through Medicaid. The first policies took effect on Wednesday.

“I suspect that the finding will be surprising to many in the policy debate,” said Katherine Baicker, an economist at Harvard University’s School of Public Health and one of the authors of the study.

An administration spokeswoman, Tara McGuinness, said that the time frame was too short to expect much of a change, and that over the longer term, use would most likely decline. She pointed to a longer-term study in Massachusetts, which expanded coverage for its residents in 2006, that found an 8 percent decline in emergency department use over a period of several years.

“Medicaid saves lives and improves health outcomes,” Ms. McGuinness said. “Plenty of studies show that.”

But many economists say that the emphasis on emergency room use, both in policy and in political speeches, is misplaced, as it makes up only a small part of health care costs in the United States. A federal government health survey found that emergency departments accounted for about 4 percent of total health spending in 2010, far less than inpatient hospital visits, which accounted for about 31 percent. Certain populations, however, like low-income people with chronic illnesses, have much higher rates of use.

Dr. Baicker and Amy Finkelstein, an economist at the Massachusetts Institute of Technology, another author, said the increased use of emergency rooms is driven by a basic economic principle: When services get less expensive, people use them more. Previous studies have found that uninsured people face substantial out-of-pocket costs that can put them in debt when they go to the emergency room. Medicaid reduces those costs.

Medicaid coverage also reduces the costs of going to a primary care doctor, and a previous analysis of data from the Oregon experiment found that such visits also increased substantially.

“This is just one piece of an increase we found across every type of care,” said Bill J. Wright, an author of the new study who is the associate director of the Center for Outcomes Research and Education in Portland, a part of Providence Health and Services, a large health care provider.

The study’s authors emphasized that Medicaid had many benefits. Previous analyses from the experiment found that gaining coverage reduced the incidence of depression and increased feelings of financial stability.

The study drew on data from the Oregon Health Insurance Experiment that included about 90,000 low-income Oregonians and randomly assigned about 30,000 of them access to Medicaid. Health experts say the experiment’s design — random assignment of coverage through a lottery — allowed them to isolate and evaluate the effects of the program. Such designs are the gold standard in medical research, but are rarely used for domestic health care policy.

Consumers Start Using Coverage Under Health Law

“I’ve had some heart palpitations, and my mom’s side has a history of heart problems starting early,” she said Wednesday in a telephone interview. “So it’s mostly just to double-check that everything is O.K.”

Ms. Hornbach, who has had breast cancer and retired early from the technology industry, said that insurance companies in Arizona had refused to cover her until about two years ago, when she got a policy with monthly premiums of $285 and a deductible of $5,500 a year. Last month, using the federal insurance exchange, she bought a midlevel silver plan with lower premiums and deductible.

“It’s a better policy — lower out-of-pocket, more choice of doctors,” she said. “This is a very happy day.”

Consumers around the country began using coverage provided by the new health care law on Wednesday, the same day that Medicaid expanded to hundreds of thousands of people in about half the states. Many provisions of the 2010 health care law offering new benefits and protections to consumers, including those with pre-existing conditions, also took effect.

Hospitals said they were getting ready for an influx of newly insured patients, but many health care providers said the pace was slower than usual because of the New Year’s holiday. In a typical report, Clay Holtzman, a spokesman for Swedish Medical Center in Seattle, said the system’s hospitals were not seeing an immediate surge.

“We might at some point down the road, since we have spent a lot of time informing uninsured patients of their options under the exchange and expanded Medicaid,” Mr. Holtzman said in an email. “But it depends on if those patients chose plans that include us.”

Swedish is one of the largest hospital systems in the region, but Mr. Holtzman said it had been excluded from the networks of providers used by the two largest health plans on the state’s insurance exchange.

Some people using their new insurance discovered that they could be responsible for substantial co-payments and other out-of-pocket costs.

Nancy M. Schlichting, the chief executive of the Henry Ford Health System in Detroit, said that one patient who visited the emergency room of the system’s flagship hospital on Wednesday tried to fill a prescription and found that the co-payment would be $84 — more than she was accustomed to paying. She got a similar drug with a lower co-payment, illustrating the need for patients to pay close attention to details of their drug coverage, Ms. Schlichting said.

In San Antonio, at a 24-hour Walgreens store, only a few vehicles were lined up at the drive-through window at midday, and no one was waiting in line to pick up prescriptions at the indoor pharmacy counter.

“It’s dead,” said Leslie Castillo, a pharmacist on duty. “We’ve had a few regulars come by, but no one has come in today with a new insurance card or wanting us to look up their benefits under Obamacare.”

One reason, Ms. Castillo said, was that most doctors were not seeing patients on the New Year’s holiday. But she added, “We’ll probably be packed tomorrow.”

Kenneth E. Raske, the president of the Greater New York Hospital Association, said: “Today is a historic occasion for the health care community. The coverage expansion kicks in for hundreds of thousands of people in New York State and millions across the country, who will enjoy the comfort of knowing they won’t have to worry about health care bills if they get sick.”

Danny Cottrell, the owner of a pharmacy in Brewton, Ala., said he had helped several people sign up for coverage. One customer, who has $3,500 to $4,000 a year in prescription drug costs, qualified for federal subsidies and chose a plan with a premium of about $300 a month and an annual deductible of $500.

“He will definitely come out ahead,” Mr. Cottrell said. “He will save at least $7,500 a year on medical bills.”

Dr. Michael W. Cropp, the president of Independent Health, an insurer in Buffalo, said, “I anticipate a lot of uncertainty and confusion and some frustration” as consumers begin to use their new insurance policies.

“The website for the New York exchange is now working for most enrollment purposes,” Dr. Cropp said. “But I have concerns about how funds will flow from the federal government to health plans for members receiving federal subsidies.”

Expecting a continued battle over health care, the White House moved Wednesday to recruit volunteers for its campaign to defend and promote the law, which is likely to be a defining issue in many congressional races this year. A White House website invites supporters and beneficiaries of the law to provide their names, email addresses and personal experiences.

“Whether you have new coverage today or know someone who does, we want to hear your story,” David Simas, an aide to President Obama, said in an email to people who had expressed interest in the issue.

Jessica Santillo, a White House spokeswoman, said the invitation was part of a systematic new effort by the administration to “highlight stories of everyday Americans benefiting from the law.”

The administration hopes to encourage enrollment and reverse public opinion polls that show approval of the health care law lagging behind disapproval.

Lisa Maria Garza contributed reporting from San Antonio, and Kimiya Shokoohi from Los Angeles.

Today's Economist: Health Care Prices Move to Center Stage

Prototype: In the Health Law, an Open Door for Entrepreneurs

The hopeful include founders of start-ups who otherwise wouldn’t have access to affordable health insurance — people like Rajeev Jeyakumar, a co-founder of Skillbridge, a Manhattan-based online job marketplace for business consultants.

Mr. Jeyakumar is uninsured. But unlike many people who were thwarted by the government’s faulty health care website, he was able to sign up for individual coverage three weeks ago. He will pay just $74 a month, after tax credits, for his new plan through the New York State exchange.

His story illustrates how, when finances are tight, new entrepreneurs often place the health of their businesses over their own health. “In the early days, a venture is often very much self-funded,” Mr. Jeyakumar says. “You always trade off between the money you need to survive in terms of paying rent and food. And when you have health care as an additional cost, it’s always very tempting to not put money into it.”

But come January, Mr. Jeyakumar will have a health plan that “even includes dental,” he wrote in an email. “I’m very pleased with the outcome.” Until then, he’s refraining from using his Citi Bike membership or playing sports, lest he sustain an injury requiring medical care.

And when it’s time to hire employees, he says he will most likely avoid the extra work of administering a company health insurance plan and instead encourage employees to shop the new health care exchanges on their own and bump up their salaries to cover the cost.

Research published in the journal Health Affairs showed that small businesses with 10 to 24 employees have paid 10 percent more than large ones for the same health care coverage, and that companies with fewer than 10 employees have paid 18 percent more until now. Small businesses’ plans were also more vulnerable to rate increases; as a result, they often provided less coverage, if they offered it at all, resulting in a competitive disadvantage in hiring.

Constantia Petrou, owner of Konnectology, a website that provides information on health care specialists, expects the new law to broaden her hiring options. When she started her company seven years ago in Burlingame, Calif., she realized that she couldn’t afford to offer a group plan.

“In terms of hiring, the health care expenses contribute a huge, huge component to your cost of operation,” Ms. Petrou says. So instead of bringing on full-time employees, she relied on contract workers.

She is looking forward to getting price information online from the Small Business Health Options Program, or SHOP, an exchange that was created by the new law. (Currently, business owners can obtain estimated SHOP prices online, but specific ones are only available by mail after filling out and mailing in a PDF downloaded from Healthcare.gov. Some states, including California, have their own SHOP exchanges, and their procedures vary.)

Ms. Petrou says the law could enable her to hire full-time employees, depending on the new costs of coverage. If so, she will either pay for a portion of the individual plans that her employees shop for on the exchange, or she may take advantage of tax credits and offer a small group plan. “We now have options to explore,” she says.

Some experts say this type of flexibility may have a big impact on the economy over all.

“Assuming we get the website working, it’s going to be the biggest step we’ve had in a long time in the U.S. in terms of changing the structure of the economy,” says Craig Garthwaite, assistant professor of management and strategy at Northwestern University’s Kellogg School of Management. Mr. Garthwaite is a co-author of one of two recent studies that conclude that the Affordable Care Act could spur entrepreneurship by easing job lock — where people stay in a job mainly for the health insurance.

The act was aimed at people like Jeannie Armstrong, who in 2009 was planning to quit her job within a couple of years to start a private clinic for adolescents with substance-abuse problems. But then her 18-year-old son learned that he had diabetes. Fearing that he would be unable to find individual health insurance, she has stayed in her job so her son could keep receiving coverage under her employer’s health plan.

“We’re talking pre-existing condition, we’re talking no money, we’re talking health care costs out of the roof,” Ms. Armstrong says of her son’s situation.

But in January, her son will be eligible for individual health insurance. That will free Ms. Armstrong to quit her job as a social worker in the juvenile court system of Fairfax County, Va., and to pursue her entrepreneurial dreams. Now, instead of opening a for-profit clinic, Ms. Armstrong has decided to go the social-entrepreneurship route. In September, she founded the nonprofit Center to End Adolescent Substance Abuse Encounters.

Over the next year, she plans to stay in her job while her son finishes school; in her free time, she will assemble a board of directors and write the organization’s bylaws. By next fall, she plans to be running the nonprofit full time.

“I’m not hamstrung by having to stay in this job,” she says.

Ms. Armstrong sees the new law as an opportunity to start something new. But Kevin Kuhlman, manager of legislative affairs for the National Federation of Independent Business, says that while job lock is a real concern for entrepreneurs, he remains skeptical that the new law will be able to solve the problem.

The federation unsuccessfully challenged the constitutionality of the Affordable Care Act’s requirement that most people obtain health insurance or pay a tax penalty,  in a case that went all the way to the Supreme Court last year. The plaintiffs were uninsured and didn’t believe that the government could require them to buy insurance.

Certainly, many established small-business owners are not clamoring for information on new health coverage. Barry Sloane, chairman and chief executive of Newtek Business Services, based in New York, says a majority of his customers
haven’t bothered to visit the exchanges.

“The negative publicity that’s come out about the site not functioning has kept people from thinking they can go to it and get a result,” Mr. Sloane says.

Promised Fix for Health Site Could Squeeze Some Users

To help meet that schedule, the Obama administration, in an abrupt shift, named a “general contractor” on Friday to oversee changes to the troubled Web site of the federal marketplace.

Such a condensed time frame raises the question of how hundreds of thousands of people whose current policies do not comply with the health law will obtain new coverage in time, and how millions who may qualify for subsidies will enroll. Some experts predicted a groundswell of demands from Congress and elsewhere to delay the deadlines.

Jeffrey D. Zients, President Obama’s troubleshooter on the project, said the general contractor, Quality Software Services Inc., a unit of the UnitedHealth Group, would now “manage the overall effort,” like a general contractor on a home improvement project. Notably, that company had a role in developing one of the most troubled components of the marketplace, which helped verify the identities of those registering.

Until now, the federal Centers for Medicare and Medicaid Services served as the project’s quarterback. Contractors complained that the agency did not have the expertise to lead such a complex and ambitious undertaking, requiring the integration of dozens of programs and databases.

People involved in the repair effort said the Nov. 30 deadline was challenging but not impossible to meet. Mr. Zients, a management expert who is in line to take over as the chief White House economic adviser on Jan. 1, said, “By the end of November, HealthCare.gov will work smoothly for the vast majority of users.”

“It will take a lot of work,” he said. “A lot of problems need to be addressed. But let me be clear: HealthCare.gov is fixable.”

Since it went live on Oct. 1, the Web site has frustrated millions of people trying to obtain insurance under Mr. Obama’s health care law. For the administration, making it work is increasingly urgent for both political and practical reasons.

In recent weeks, insurance companies have notified hundreds of thousands of people around the country that their current coverage will end on Dec. 31 because it does not comply with the Affordable Care Act. For example, the policies may not provide “essential health benefits” like maternity care and may not cover as much of the medical costs as required by new federal standards.

In a typical letter, about 25,000 policyholders of Independence Blue Cross in Pennsylvania were informed, “As a result of the health care law, your current health plan will be discontinued effective December 31, 2013.”

Consumers living in Washington, D.C., were informed by CareFirst BlueCross BlueShield that “your current plan will cease to exist” on Jan. 1 because it does not conform to the new federal mandates.

Blue Cross and Blue Shield of Florida said it was informing about 300,000 subscribers that their insurance policies did not meet the new requirements.

Consumers are typically offered new coverage that meets federal standards, but the cost of comparable policies may be more or less than what they now pay, depending on a person’s age, income, family size, place of residence and tobacco use, among other factors.

Millions of consumers with individual policies are expected to qualify for subsidized rates. But the government must calculate the correct subsidies and process the enrollments — functions that were to be handled mainly by the Web site. People can also file applications on paper or by phone.

More than 19 million people have visited the Web site in the three and a half weeks since it opened as the main online vehicle in 36 states for choosing insurance coverage. But insurance executives said they were still receiving incomplete and inaccurate data on those who manage to get through the application process.

Mr. Zients said more than ninety percent of users were now able to create accounts, but only three out of ten were “getting through the application process.”

Robert Pear reported from Washington, and Sharon LaFraniere from New York. Ian Austen contributed reporting from Ottawa, and Reed Abelson from New York.

Your Money: Questions Often Asked About Health Law

Those who managed to create accounts or peruse the plans offered in their state left with many questions about the Obama administration’s health care plan. Among them: What does all of this mean for my 26-year-old child, who is now too old to remain on my own policy? The premium subsidies are based on my income, but what if I have no idea what I may earn next year? How is “modified adjusted gross income” calculated anyway?

Last week, my column addressed the broad outlines of how the exchanges will work, from how the different tiers of coverage would be structured to what types of individuals would qualify for tax credits on their premiums.

Dozens of additional queries landed in my in-box this week. Here’s are some of the most frequently asked questions and an attempt at answering them:

Q. I haven’t seen any discussion about students. My son will be 26 next month, and thus can no longer be on my plan. He is a full-time student in another state and fully dependent on my financial support. Do you know where he fits into this system?

— Mark Alper, Berkeley, Ca.

A. Adult children lose coverage through a parent’s policy on their 26th birthday. But they can then immediately enroll on the exchange — even outside the open enrollment period, which ends on March 31. Individuals under age 30 may also qualify for a “catastrophic” plan, which carries a lower premium but a very high deductible (equivalent to the out-of-pocket maximum, or $6,350 for a single person, in 2014). Tax credits, however, cannot be applied to catastrophic plans.

Q. My difficulty and confusion is I don’t actually know what my annual income is or will be in the coming fiscal year. I am a freelance classical musician, meaning I have seasonal employment from as many as 20 employers in a year and I file tax returns in seven states and three countries.

— gibarian, San Francisco

A. The experts I spoke with said you needed to make your best educated guess when estimating your income. The exchange will verify it by checking your tax return from last year as well as your current income. (The federal government has contracts with firms that provide that information.) If your self-attested income varies by more than 10 percent when compared to those two sources, you will be asked to provide more documentation, according to a spokeswoman at the Department of Health and Human Services.

Q. I have very little annual personal income, but am fortunate to have other savings/resources that would allow me to pay for one of the better plans with higher premiums. (I have no access to any employer-sponsored plan). I am willing to enroll in one of these better plans on my state’s health exchange even if I don’t get any subsidy for it. (I seem to earn too little to qualify for a subsidy anyway.) Will I be allowed to do this, and do this without penalty or added taxes?

— KRyan, New York City

Q. I am currently unemployed but have a sizable trust fund. Do I qualify for discounts/tax credits when buying health insurance? Will I be required to show my federal tax return?

— Jory, Columbus, Ohio

A. You can certainly buy coverage on the exchanges when you don’t have coverage through an employer. Whether or not you pay full price or qualify for a premium tax credit depends on your modified adjusted gross income, which is based on your latest tax return (and yes, the exchanges will check your return).

If your household’s modified adjusted gross income is from 100 to 400 percent of the federal poverty level (that’s $11,490 to $45,960 a year if you’re filing as an individual and $23,550 to $94,200 for a family of four), you may be eligible for a premium tax credit, according to CCH, a tax and accounting service.

Several readers had questions about how the modified adjusted gross income is calculated. It’s basically your “adjusted gross income,” which can be found on line 37 of your 1040 tax return form. But it requires that you add back certain items like nontaxable Social Security income, tax-exempt interest and foreign-earned income, Mark Luscombe, a principal analyst at CCH, said.

The figure also includes income from items like dividends, interest, real estate and retirement account withdrawals. So even if you do not have much earned income, but have significant income from other sources, you obviously won’t qualify for financial assistance.

Premium tax credits and cost-sharing subsidies are generally based on your household income, which includes your spouse and any dependents for whom you file a personal exemption and who also earn enough money to file a return, he added.

Q. I get insurance through my employer. My same-sex husband has little to no income and will be using the exchange. Our state of residence (Virginia) is letting the federal government run the exchange. Our state does not recognize our marriage, but the Internal Revenue Service does. How will he determine income when using the exchange?

— S.G., Eastern U.S.

A. The I.R.S. said last month that all married same-sex couples would be treated as married for federal tax purposes, regardless of where they live. And starting in the 2013 tax year, all married couples will be required to file their returns together as either “married filing jointly” or “married filing separately.”

The insurance exchanges will also see you as married. In fact, if you’re a married couple buying insurance on the exchange — gay or straight — you’re required to file a joint federal return, the Treasury Department said. (Why? Imagine how many more people would qualify for subsidies if they used “married filing separately” status.)

Letters: The Long, Long Wait for Mental Health Care

The Long, Long Wait For Mental Health Care

To the Editor:

“When It Comes to Mental Health Coverage, a Long Line of Patients Is Still Waiting” (Sept. 29) highlights what is sadly a pervasive barrier to recovery for mentally ill children and adolescents. In our emergency program for youth in psychiatric crisis, we commonly see young people who are suicidal, psychotic, dangerously aggressive, traumatized or deeply depressed. We know that for these types of major mental illness, prompt and effective treatment can make the difference between real recovery and a lifetime of disability.

Yet insurance companies routinely balk at paying for such treatment, passing the cost of illness on to families, schools and the children themselves, who without treatment will continue to suffer, often for years. Many go on to be mentally ill adults, often unemployed, homeless or in jail. Effective treatment for childhood psychiatric illness could reverse this course and cut costs in the long run, if our policy makers could ensure that every child has access to the right treatment at the right time.

RUTH GERSON, M.D.

JENNIFER HAVENS, M.D.

Manhattan, Oct. 1

Dr. Gerson is director of the Bellevue Hospital Children’s Comprehensive Psychiatric Emergency Program. Dr. Havens is director and chief of service at the hospital’s Department of Child and Adolescent Psychiatry.

•

To the Editor:

Your well-meaning article unfortunately reinforces incorrect and stigmatizing stereotypes that allow insurers to justify withholding care — even though the Mental Health Parity and Addiction Equity Act of 2008 clearly states that this is against the law.

More research is certainly required to reach a “gold standard” of care, but this is true in all of medicine. There is no justification for insurers to prolong patients’ suffering and wait for them to “fail first” before treating their disorder seriously. This is like making patients wait in the parking lot to finish having their heart attacks or strokes, allowing permanent damage, before letting them into the emergency room for treatment.

The article states that “there is often little accepted medical evidence to support the range of treatments for many mental illnesses, like schizophrenia and severe depression.” But, in fact, evidence-based treatments for these two diseases are some of the longest and best established in medicine. Of course, treating mental illness is different than treating a heart bypass or hip replacement, but that doesn’t justify paying for one and not the other.

PATRICK J. KENNEDY

Brigantine, N.J. Sept. 30

The writer, a former member of Congress from Rhode Island, was an author of the 2008 Mental Health Parity and Addiction Equity Act.

Letters for Sunday Business may be sent to sunbiz@nytimes.com.

DealBook: K.K.R. to Buy Panasonic Health Care Unit for $1.67 Billion

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Your Money: A Guide to the New Health Insurance Exchanges

But after much anticipation, the curtain will finally rise on the exchanges next week, providing millions of consumers with an online marketplace to compare health insurance plans and then buy the coverage on the spot.

The exchanges are likely to be most attractive to people who qualify for subsidized coverage. Individuals with low and moderate incomes may be eligible for a tax credit, which can be used right away, like a gift card, to reduce their monthly premiums. People with pre-existing conditions will no longer be denied coverage or charged more (this applies to most plans outside the exchanges, too). And all of the plans on the exchanges will be required to cover a list of essential services, from maternity care to mental health care.

“In today’s individual market, it’s like Swiss cheese coverage,” said Sarah Dash, a research fellow at the Health Policy Institute at Georgetown University. “Consumers should have an easier time figuring out what they are getting for their money.”

But it’s still going to take some time to analyze the plans and their costs, which are expected to vary widely across the states. And the coverage may still pinch many families’ budgets. Fortunately, there’s a six-month window, from now to March 31, for people to figure it all out.

Here’s some information to get you started:

Q. Where can I apply or get more information on the exchanges?

A. To avoid fraud artists, enter through the front door: Healthcare.gov. From there, you can find links to the exchange offered in your state. Alternatively, you can call 1-800-318-2596.

Q. When does coverage go into effect?

A. You can apply as early as Oct. 1, but coverage won’t begin until Jan. 1. The enrollment period for coverage in 2014 closes on March 31, 2014. After that, you can enroll only if you have a major life event like a job loss, birth, marriage or divorce.

Q. What sort of coverage will be offered?

A. All plans will have to provide the same set of essential benefits, including prescriptions, preventive care, doctor visits, emergency services and hospitalization (this also applies to most individual and small-employer group plans sold outside of the exchanges). Plans can offer additional benefits, or different numbers of visits for services like physical therapyso you’ll need to do a side-by-side comparison to see what fits your needs — or at least the needs you can anticipate.

Q. How are the plans structured?

A. There are four plan levels, each named for a precious metal. They all generally offer the same essential benefits, but their cost structures vary. The lower the premium, the higher the out-of-pocket costs.

The bronze level plan, for instance, has the lowest premiums, but will require consumers to shoulder more costs out of pocket. They generally cover 60 percent of a typical population’s out-of-pocket costs, and include deductibles, co-payments and coinsurance. The silver plans cover 70 percent; gold, 80 percent; while platinum covers 90 percent (and therefore carries the highest premiums).

If you buy a plan on an exchange, your annual out-of-pocket costs cannot exceed $6,350 for individuals and $12,700 for a family of two or more in 2014. Catastrophic plans are also available to people under age 30 or those suffering a financial hardship. These carry high deductibles (equivalent to the out-of-pocket maximum, or $6,350 for a single person, in 2014). You cannot apply tax credits to these plans, either.

Premiums will vary across the states because of a variety of factors, from market competition and the underlying cost of care to the negotiating power of the exchanges, according to Kaiser research.

Q. If the costs with plan levels are similar, how will plans differ within the metal levels?

A. Networks of doctors and hospitals will differ, and cost-sharing structures may also vary. One plan might have lower deductibles and higher co-pays, whereas another plan may have a separate deductible for prescriptions. Various medications may also be covered differently. “If you are someone who is taking medicines, make sure you know what your drugs will cost in the various plans being offered,” said Cheryl Fish-Parcham, deputy director of health policy at Families USA, a Washington consumer advocacy group.

Q. Will I be eligible for a premium tax credit (subsidized coverage)?

A. People with income between 100 percent of the poverty line (or about $23,550 for a family of four) and 400 percent of poverty ($94,200 for a family of four) are eligible for a tax credit to defray premium costs. (All income eligibility is based on your modified adjusted gross income; the online version of this column links to a guide explaining how that is calculated).

The tax credits are set up so that consumers will not have to pay more than a certain percentage of their income, ranging from 2 percent for those with incomes of up to 133 percent of the poverty level ($15,282 for a single and $31,322 for a family of four) to 9.5 percent for those with income of 300 to 400 percent of the poverty level, according to the Center on Budget and Policy Priorities. The dollar amounts of the credits are calculated based on the costs of the second-to-lowest-cost silver plan available to you.

Kaiser has a calculator that can give you an idea of your eligibility.

Q.Can I get help with my out-of-pocket expenses, like deductibles?

A. People with incomes between 100 percent of the federal poverty line ($23,550 for a family of four) and 250 percent ($58,875 for a family of four) are also eligible for cost-sharing reductions, which means you’ll pay less for items including deductibles and co-payments, and you’ll have lower out-of-pocket maximums.

Administration Rejects Union Pleas on Health Law

The decision, likely to infuriate some of Mr. Obama’s closest political allies, denies federal tax credits to workers who receive health coverage under employee benefit plans sponsored by more than one employer. Such plans are common in construction and other industries.

Under the 2010 health care law, the tax credits will be available starting next year to low- and moderate-income people who buy private insurance in state-based marketplaces known as exchanges. The administration’s decision was made by the Treasury Department, but almost surely approved by the president.

The Treasury said its conclusion resulted from a straightforward reading of the 2010 health care law, which says that workers are not eligible for premium tax credits if they have been offered affordable coverage under an employer-sponsored plan that provides minimum value.

“An individual who is covered by an eligible employer-sponsored plan would not be eligible to receive a premium tax credit,” the Treasury said in a letter to Congress.

The Obama administration said that workers covered by multiemployer plans already received a substantial tax benefit. Their coverage is typically financed by contributions from employers, and, like most other employer-provided coverage, these contributions are not counted as taxable income to the employees, the administration said.

The Treasury letter was sent Friday to Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee, and Senator Orrin G. Hatch of Utah, the senior Republican on the Finance Committee.

They had warned the administration on Tuesday not to “provide a special exemption to unions at the expense of American taxpayers.”

In a joint statement on Friday night, Mr. Camp and Mr. Hatch said: “There has been far too much special treatment for politically favored friends of Obamacare. When it comes to employers and taxpayers picking up the health care tab for labor unions — it appears that is a price that is simply too high. Perhaps even this administration recognizes that there are limits to them stretching the law to reward their friends.”

Labor leaders criticized the health care law at a convention of the A.F.L.-C.I.O. in Los Angeles this week. They said the law could destabilize the employer-based system of health insurance and encourage some companies to dump workers into the newly created health insurance exchanges. Richard Trumka, the president of the A.F.L.-C.I.O., had conveyed those concerns directly to Mr. Obama and other White House officials.

In a letter to the top Democrats in Congress in July, James P. Hoffa, president of the Teamsters, and two other union presidents said that perverse incentives in the Affordable Care Act were “already creating nightmare scenarios.” They said that “numerous employers have begun to cut workers’ hours” to avoid the cost of providing them health benefits.

And the labor leaders said that multiemployer health plans should be eligible for tax credits, just as commercial insurance companies will be able to receive such credits to help pay premiums of low- and moderate-income people.

Union leaders said they were particularly annoyed that Mr. Obama had denied their request while granting relief sought by employers. The administration delayed by one year, to 2015, a requirement for larger employers to offer coverage to full-time employees.

Frequent Flier: Really Affordable Health Care, and It Came With a Doorman, Too

ABOUT 20 years ago, I was working as a marketing executive. I was young and had never been on a business trip so I was really excited when my employer sent me to Brussels. I still remember eating really good cheese and drinking really good beer while I was there. I thought that traveling for business was incredible.

Q. How often do you travel for business?

A. About two weeks a month, predominantly to China, Latin America, Europe and the Middle East.

Q. What’s your least favorite airport?

A. Actually, I don’t like any of them. But if I have to pick, I guess I like Charles de Gaulle the least. As an airport, it’s completely useless. The architecture is just so ugly it’s almost compelling.

Q. Of all the places you’ve been, what’s the best?

A. It’s impossible to pick one place, since unlike airports, I actually do like a lot of different places. I spent some time in Gloucestershire, England, and it was absolutely spectacular.

Q. What’s your secret airport vice?

A. I eat too much, specifically Nathan’s hot dogs, pretzel-fried things and bacon rolls. I can’t stop myself.

I still like seeing new places and meeting new people, but I sure don’t get excited about flying anymore, and I travel about 150 days out of the year. It’s O.K. once I’m in the plane, but like most other travelers, I’m not that good with long lines at security or delays. I’m a brand manager for the St. Regis, W Hotels and the Luxury Collection. I can do some things through e-mail, conference calls and even videoconferencing. But there is still a lot that requires those face-to-face meetings. I went to London last year and stayed for maybe half a day. I was meeting with some team members and we got more done in an afternoon by actually being together and talking than relying on technology.

I travel to Asia quite a bit and some cultural things take some getting used to. If there are 20 people invited to a dinner, a host will often toast all 20 people, with individual shots. I’ve taken to spitting some of the liquor in a water glass, which is a lot harder than you think when you’re surrounded by people you don’t want to offend. I have not recognized a lot of the food I’ve eaten in Asia, but I have to say most of it was really good.

One of the worst experiences anyone can have while traveling is getting sick. I know, because during my first trip to Bangkok for the St. Regis brand back in 2010 I did. Apparently, I was bitten by a bug and when I got up in the morning my eye was swollen shut.

Actually, I looked as if I went several rounds with Mike Tyson. My eye was huge. I had to go inspect a hotel construction site, so I put on a pair of sunglasses and hoped for the best. The hotel was only half-done, and lit with construction lights, so I looked kind of ridiculous walking around in the dark with these wraparound shades on my face. I did show my colleagues my eye and their reactions were priceless. I thought they were going to pass out.

I realized I needed to get to a hospital, but I was a little scared about what kind of medical care I would encounter. The concierge recommended a hospital, so that’s where I went. At the hospital, I was greeted by a doorman. I’m used to this at hotels, but not at hospitals. The doorman blew a whistle, which alerted an English-speaking nurse to escort me to the waiting room. Within a few minutes I met with a doctor who recommended some medicine to reduce the swelling. I was even escorted to the pharmacy. The whole thing cost only $19 at the time. I was shocked. Not only was the cost astonishingly low for a hospital bill, but it also included all the delights of a five-star hotel, which comes with a higher price tag. What was once the most miserable part of my travels surprisingly became one of the most pleasant, swollen eye and all.

By Paul James, as told to Joan Raymond. E-mail: joan.raymond@nytimes.com

You're the Boss Blog: Business Owners Say They Have Yet to Figure Out Health Care

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Economix Blog: The Central Challenge in U.S. Health Policy

Advertising: Songs and Sunscreen Spread the Health Insurance Message

THE part of President Obama’s Affordable Care Act that requires Americans to obtain health insurance has been a contentious issue politically, but new advertising from the 17 states setting up marketplaces where residents will buy insurance tends to be buoyant.

New commercials for the Oregon exchange, called Cover Oregon, for example, resemble something from a tourism bureau. In one commercial, the singer Matt Sheehy performs an anthemic song, “Long Live Oregonians,” that is reminiscent of “This Land Is Your Land” by Woody Guthrie.

“From Hart Mountain, to the Skidmore Fountain, from the shores of Gold Beach, to the gorge out east,” sings Mr. Sheehy, who wears a plaid flannel shirt and appears strumming his guitar in each new location as he refers to it. “We’re free to be healthy, gonna breathe that fresh air, wanna get the best care, that a state can get.”

Neither this commercial, nor others featuring the singer Laura Gibson or the hip-hop group Lifesavas, mention insurance, although they do conclude with the exchange’s Web address.

A recent survey of uninsured Oregonians commissioned by Cover Oregon found that 87 percent of respondents were unfamiliar with the exchange, while 9 percent had a favorable opinion of it and 3 percent an unfavorable opinion. The first phase of the campaign, which was introduced on July 9, aims to familiarize Oregonians with the name of the organization. Subsequent ads will promote enrollment in the program, which, like other states’, begins Oct. 1 for coverage that takes effect Jan. 1.

“If all we were doing is what we’re doing right now, I’d be nervous,” said Amy Fauver, chief communications officer of Cover Oregon, referring to the first phase of the campaign. “But we needed to get our name out there, and get positive associations with our name, and in the fall we’re shifting to a more direct call to action.”

The campaign, by North, a Portland branding and advertising agency, also features other Oregon musicians in Web-only music videos, television and radio commercials. Work by Oregon visual artists is featured in print ads and on billboards. A promotional budget of almost $10 million includes placing advertising, the agency fee and the public relations efforts.

A Kaiser Family Foundation survey in April found that 59 percent of Americans with household incomes under $30,000, a group more apt to be uninsured, were unaware that the Affordable Care Act and its insurance requirement were the law of the land.

The first state to introduce an ad campaign was Colorado, which in May began running television commercials for Connect for Health Colorado. As with other states, the Colorado online marketplace resembles travel sites like Expedia, with competing insurance companies and a choice of coverage levels, and the commercials open with residents navigating the site.

After actors in the spots choose a plan, the walls of their homes slide away to reveal other settings, and they end up either celebrating a win in a casino, being sprayed with Champagne in a locker room or astride a horse in a winner’s circle. The ads close with a voice-over, “When health insurance companies compete, there’s only one winner: you.”

The campaign, which includes print, radio and billboard ads, is by Pilgrim, an advertising and digital marketing agency in Denver. Connect for Health Colorado is projected to spend more than $21 million on marketing and advertising, according to an analysis by The Associated Press.

Decidedly more somber is a campaign that began July 15 for Nevada’s marketplace, with a documentary-style approach that focuses on the perils of not having coverage.

“I live fast and play hard,” says the text for one print ad, with a portrait of a man in his early 20s. “But I don’t have health insurance and that scares me.”

C. J. Bawden, communications officer for the Silver State Health Insurance Exchange, said that focus groups of Nevadans indicated a preference for a serious tone.

The focus groups “said health care is a serious matter so please don’t trivialize it and make funny ads about it because we want the facts,” Mr. Bawden said.

The campaign, by KPS3, a marketing and advertising agency in Reno, Nev., includes spots on TV, radio, billboards, newspapers and social media, with projected advertising placement expenditures at about $2.8 million.

In August, beachgoers in Connecticut will be handed packets of sunscreen printed with “Get Covered” and the logo and Web site for Access Health CT, the state’s health insurance exchange. Roving representatives of the exchange clad in orange T-shirts also will hand out branded containers of hand sanitizer and packets of adhesive bandages.

The tchotchkes are part of an extensive $6 million promotional and advertising campaign, which includes television commercials and print, online and radio advertising. The campaign is by Pappas MacDonnell, a marketing and advertising agency in Southport, Conn.

Advertising for health exchanges in Utah and Rhode Island will be introduced between mid-August and early September, according to representatives from the programs.

The Covered California exchange is projected to spend $86 million on advertising placements through April 2015, and it has hired Weber Shandwick, a unit of the Interpublic Group of Companies, to develop and produce advertising, and Ogilvy Public Relations Worldwide to help promote it. A representative of the exchange said advertising would be introduced before open enrollment begins on Oct. 1, declining to be more specific. The health exchange for New York, which has yet to announce what it will be called, has a $40.2 million advertising and marketing budget for the next two years and has hired the New York office of DDB Worldwide, part of the Omnicom Group. The agency will develop a campaign with television, print, online and transit advertising.

The campaign will begin in mid- to late-September, according to Bill Schwarz, director of public affairs for the New York State Department of Health.

Health Law Delay Puts Exchanges in Spotlight

The Obama administration’s decision, announced on Tuesday, to delay for a year a requirement that larger employers provide insurance or pay a penalty has made the operation of the state exchanges — where individuals can shop for insurance starting Oct. 1 — more critical to the success of the new health care law.

The delay is viewed as an unspoken acknowledgment by federal officials of the size of the task ahead, according to policy experts and benefits consultants. By putting off the employer requirements, officials are in a position to concentrate on making sure the state exchanges work.

“The real focus is now getting the individual exchanges and premium tax credits up and running,” said Timothy S. Jost, a law professor at Washington and Lee University who closely follows the new law, known as the Affordable Care Act.

In addition to the creation of the exchanges, the law’s broad market reforms of the insurance industry and the expansion of Medicaid will continue, Mr. Jost said, adding, “I just don’t see this as a game changer.”

Also still in effect is the requirement that people without insurance buy it by 2014 or face fines. Subsidies will be available for people who meet income requirements.

The companies affected by the delay — those with 50 or more full-time employees — were increasingly anxious about their ability to meet the law’s requirements, given the delay by the administration in issuing the final rules for the companies to follow to ensure they were in compliance, said Helen Darling, the president of the National Business Group on Health, which represents employers that offer health benefits.

“This is a recognition that they were not going to meet some key deadlines,” she said.

Companies that employ fewer than 50 workers have already been given a reprieve from the law’s requirements.

Many of the companies being granted the latest reprieve either offered no coverage or provided it only to certain workers — like managers or those working 40 hours a week. Some employers had been expected to pay the law’s penalty of $2,000 a worker for every employee rather than provide insurance, while others said they would go ahead and offer it.

“We don’t know how many people would have gained coverage or won’t because of the delay,” said Paul Fronstin, a senior researcher at the Employee Benefit Research Institute. “It’s not a big deal because it doesn’t affect many people, but it’s a big deal if it affects you.”

A large majority of larger employers — 94 percent — already offer coverage, according to the Kaiser Family Foundation, which studies the market. “We do believe the practical effect of this will be really quite modest,” said Drew Altman, the foundation’s president.

The reprieve will give companies more time to consider what they should do over the next year. Bill Petersen, who owns a franchise of the elder-care business Visiting Angels in South Elgin, Ill., outside of Chicago, for example, does not offer coverage to his 100 full-time employees and had been deciding whether to cut back their hours to avoid the law’s requirement or start providing health benefits.

When he heard about the delay, Mr. Petersen, who celebrates any good news by ringing a bell in the main office, said he “went down there and rang the bell.”

“It was just a relief to know that we had some time to be able to look at our options and understand the act just a little bit more,” he said.

Others say they plan to proceed with their plans to expand their coverage, although they are waiting for final guidance from the administration before deciding what benefits they will offer. “I still want to stay on the same time line,” said Don Fox, the chief executive of Firehouse Subs, a chain of restaurants based in Jacksonville, Fla. At the company-owned restaurants, only general managers and headquarter personnel are now offered coverage, and Mr. Fox said the company was going to cover the additional 90 to 100 employees required under the law. “I’ve been setting an expectation with our employees,” he said.

Thom Mangan, the chief executive of United Benefit Advisors, described the delay as “a nice gift that the government gave.” He said that companies that employ many part-time and hourly employees would probably delay providing additional benefits in the next year. “They would be crazy not to,” he said.

DealBook: Tenet to Acquire Vanguard Health Systems for $1.8 Billion

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DealBook: Talk of Takeover Grows at Health Management Hospital Group

David Albers/Naples Daily NewsPhysicians Regional Medical Center in Naples, Fla., part of Health Management Associates, the third-largest for-profit chain.

Ever since the chief executive of Health Management Associates, the for-profit hospital system, abruptly announced nearly three weeks ago that he would be leaving to lead a religious mission in South America, speculation has mounted about whether the company could be headed for a takeover.

Its stock has soared 36 percent to a six-year high. Its largest shareholder appears eager to play a bigger role in determining the company’s next steps, even if that means taking on the board. And executives from the most likely potential buyer have — without naming names — indicated they could be in the market.

This week, H.M.A., which is based in Naples, Fla., said its board had hired financial advisers to help it consider strategic alternatives but also made clear it would not discuss its plans in any detail.

Pressure is intensifying on the company and its board, particularly its chairman, William J. Schoen, who is viewed by some analysts as less than enthusiastic about selling.

A former chief executive who has shaped and reshaped the company several times over the decades, Mr. Schoen, 77, has been chairman for 27 years.

“He’s certainly someone who’s played a very strong role in forming the company’s strategy,” said Darren Lehrich, an analyst at Deutsche Bank. “There could be some protecting-the-legacy issues there.”

H.M.A. is the nation’s third-largest for-profit hospital chain, by number of beds, with 71 locations. It has struggled in recent months with falling inpatient admissions to its hospitals.

While other hospitals also reported weaker financials in the first few months of this year, the company’s revenue may have also been hurt by an investigation by CBS’s “60 Minutes” that ran late last year, highlighting concern over whether patients were being unnecessarily admitted. In the report, several former employees said the company coerced doctors to admit patients to its hospitals, regardless of medical need, to increase company profits.

H.M.A. has denied the accusations, saying admissions are based solely on what is best for patient care.

Among the myriad government investigations and civil lawsuits that the company discloses in its regulatory filings, H.M.A. has also indicated that United States attorney’s offices in seven states were investigating its physician referrals, including financial arrangements and the “medical necessity of emergency room tests and patient admissions.”

The inquiry appears to be part of a broader look by federal regulators into whether some of the nation’s hospitals are pressing emergency physicians and others to admit patients who could be treated without having to stay overnight in the hospital.

H.M.A. said it was cooperating with regulators.

Some Wall Street analysts say those various investigations and lawsuits could turn off potential buyers.

“Buying H.M.A. means dealing with its troubled operations plus escalating risks from burgeoning legal issues that could prove prohibitively expensive,” Vicki Bryan, an analyst at the bond research firm Gimme Credit, wrote in a note to clients earlier this month.

Others note that since a wave of acquisitions several years ago by private equity, most of the deal activity among public hospital systems has been for single hospitals or smaller deals.

“There are a lot of smaller, not-for-profit hospitals that are looking for financial partners,” said Dean Diaz, a senior credit officer at the Moody’s Corporation. “There are a lot of potential targets out there that can be done without necessarily looking for a big transformational deal.”

A series of curious moves kindled the recent speculation around the company.

In early May, Glenview Capital Management, the hedge fund founded by Lawrence M. Robbins, signaled in a regulatory filing that it had increased its stake and now held more than 37 million shares, or 14.6 percent of H.M.A.’s outstanding shares. The filing allowed it to make direct recommendations to the board.

The company’s stock hardly budged on the news. But the filing drew a much sharper, defensive response from the board.

More than two weeks later, at a board meeting, the company adopted a so-called poison pill to thwart any hostile takeover by a large investor. The pill goes into effect if any investor tries to buy 15 percent or more of the company.

Within a few days Glenview issued a clarification that said it had no interest in acquiring the company.

Investors were then surprised in late May when the company announced that its chief executive, Gary D. Newsome, 55, would retire at the end of July to take over as president of the Uruguay-Montevideo Mission in South America.

Mr. Newsome, who became chief executive in 2008, earned nearly $22 million in total compensation over the last three years, according to regulatory filings. Mr. Newsome had been a senior executive at Community Health Systems, another for-profit hospital system.

Gary Newsome is leaving as C.E.O. of the hospital chain.

This week, Glenview raised the stakes when it asked the board to remove or change the poison pill in a way that would allow investors to acquire a bigger stake without activating it, according to the regulatory filing.

The letter added that Glenview was evaluating whether to formulate a proposal to make changes “to all or a portion” of the company’s board.

That’s an unusually aggressive and public stance for Mr. Robbins, who observers say prefers to exert his influence on companies in a more friendly, behind-the-scenes way.

Mr. Robbins has been eager for hospital stocks for more than a year, talking them up at a New York investor conference a year ago. Glenview owns stakes in several publicly traded for-profit hospital systems.

The list of potential buyers for H.M.A. isn’t long, with many pointing to Community Health as the most likely candidate.

Citing the company’s success in its $6.8 billion takeover of Triad Hospitals in 2007, an executive for Community Health told investors at a conference in late May that it was “open to doing that again.”

But the executive emphasized that any potential deal would have to be done on friendly terms. Community Health learned that lesson the hard way after its unsuccessful unsolicited bid for Tenet Healthcare in 2010 wound up in an ugly mix of lawsuits and accusations of fraud and wrongdoing between the two hospital systems.

Community Health has disclosed it is also under investigation by the Justice Department, which is seeking information “about our relationships with emergency department physicians, including financial arrangements.” Community said it was cooperating with government officials. The company declined to comment further on the investigation and its potential interest in H.M.A.

The question many are asking is whether H.M.A.’s directors, particularly Mr. Schoen, would welcome even a friendly bid.

In its statement on Wednesday, the board said it had engaged Morgan Stanley and Weil, Gotshal & Manges to consider “strategic alternatives and opportunities available to H.M.A.”

While Mr. Schoen has spurned efforts by others to acquire H.M.A. in recent years, he is certainly no stranger to deal-making. The chairman of a small bank in Naples that he had started, Mr. Schoen joined H.M.A.’s board in 1983. Less than two years later, after setting the company on its course of acquiring rural hospitals, he was named co-chief executive.

Later, in 1988, Mr. Schoen took H.M.A. private and then public again in 1991.

But a few years ago, in 2007, when H.M.A. engaged in serious discussions about a potential buyout with a group of private equity firms, Mr. Schoen thwarted their efforts. He engineered a deal in which the company borrowed $3.25 billion, loading the company up with debt, to pay shareholders $2.4 billion in dividends.

Economic Scene: Examinations of Health Costs Overlook Mergers

But when the Federal Trade Commission finally decided to look at the deal, it encountered an entirely different objective: to gain market power.

Mark Neaman, Evanston’s chief executive, had told his board that the deal would “increase our leverage, limited as it might be,” the investigation found, and “help our negotiating posture” with managed care organizations. The commission caught Ronald Spaeth, the Highland Park C.E.O., talking about the corporation’s three hospitals and explaining how “it would be real tough for any of the Fortune 40 companies in this area whose C.E.O.'s either use this place or that place to walk from Evanston, Highland Park, Glenbrook and 1,700 of their doctors."

It was a great deal for the hospitals. The fees they charged to insurers soared. One insurer, UniCare, said it had to accept a jump of 7 to 30 percent for its health maintenance organizations and 80 percent for its preferred provider organizations.

Aetna said it swallowed price increases of 45 to 47 percent over a three-year period. “There probably would have been a walkaway point with the two independently,” testified Robert Mendonsa, an Aetna general manager for sales and network contracting. “But with the two together, that was a different conversation.”

And who was left holding the bag? Not the shareholders of UniCare or Aetna. It was the people who bought their policies, who either paid higher premiums directly or whose wages grew more slowly to compensate for the rising cost of their company health plans.

The commission’s unusual investigation of the aftermath of the Evanston-Highland Park deal produced its first successful antitrust case against a hospital merger since 1990, after a string of defeats in court. Highland Park and Evanston were forced to negotiate separately with insurers, rather than as a bundle. Collusion was forbidden.

What was learned from the investigation is more relevant than ever today. It should draw policy makers’ attention to an elephant in the room that appears to have been overlooked in the debate over how to rein in the galloping cost of health care: a lack of competition in what is now America’s biggest business — accounting for almost 18 percent of the nation’s gross domestic product.

Our anguished search for ways to slow runaway health spending has so far mostly focused on how to eliminate waste: Might the fee-for-service system used by health care providers across the nation provide perverse incentives for doctors and hospitals to prescribe costly yet pointless treatments? Are doctors prescribing every possible test to insulate themselves from any conceivable lawsuit?

The Obama administration is betting heavily on waste control to address the problem. It has offered incentives for accountable care organizations, which get a bundled payment to keep a patient in good health rather than charge for individual procedures. It has financed research into comparative effectiveness — hoping to steer patients to the best therapies.

What is missing from the stampede of policy innovation is something to tackle one of the best-known causes of high costs in the book: excessive market concentration.

Two decades ago, there were on average about four rival hospital systems of roughly equal size in each metropolitan area, according to research by Martin S. Gaynor of Carnegie Mellon University and Robert J. Town of the University of Pennsylvania. By 2006, the number of competitors was down to three.

The share of metropolitan areas with highly concentrated hospital markets, by the standards of antitrust enforcers at the Justice Department and the Federal Trade Commission, rose to 77 percent from 63 percent over the period.

And consolidation is continuing. Professor Gaynor counts more than 1,000 hospital system mergers since the mid-1990s, often involving dozens of hospitals. In 2002 doctors owned about three in four physician practices. By 2008 more than half were owned by hospitals.

If there is one thing that economists know, it is that market concentration drives prices up — and quality and innovation down.

Research by Leemore S. Dafny of Northwestern University, for instance, found that hospitals raise prices by about 40 percent after the merger of nearby rivals.

Other studies have found that hospital mergers increase the number of uninsured in the vicinity. Still others even suggest that market concentration may hurt the quality of care.

Paying Till It Hurts: Colonoscopies Explain Why U.S. Leads the World in Health Expenditures

MERRICK, N.Y. — Deirdre Yapalater’s recent colonoscopy at a surgical center near her home here on Long Island went smoothly: she was whisked from pre-op to an operating room where a gastroenterologist, assisted by an anesthesiologist and a nurse, performed the routine cancer screening procedure in less than an hour. The test, which found nothing worrisome, racked up what is likely her most expensive medical bill of the year: $6,385.

That is fairly typical: in Keene, N.H., Matt Meyer’s colonoscopy was billed at $7,563.56. Maggie Christ of Chappaqua, N.Y., received $9,142.84 in bills for the procedure. In Durham, N.C., the charges for Curtiss Devereux came to $19,438, which included a polyp removal. While their insurers negotiated down the price, the final tab for each test was more than $3,500.

“Could that be right?” said Ms. Yapalater, stunned by charges on the statement on her dining room table. Although her insurer covered the procedure and she paid nothing, her health care costs still bite: Her premium payments jumped 10 percent last year, and rising co-payments and deductibles are straining the finances of her middle-class family, with its mission-style house in the suburbs and two S.U.V.’s parked outside. “You keep thinking it’s free,” she said. “We call it free, but of course it’s not.”

In many other developed countries, a basic colonoscopy costs just a few hundred dollars and certainly well under $1,000. That chasm in price helps explain why the United States is far and away the world leader in medical spending, even though numerous studies have concluded that Americans do not get better care.

Whether directly from their wallets or through insurance policies, Americans pay more for almost every interaction with the medical system. They are typically prescribed more expensive procedures and tests than people in other countries, no matter if those nations operate a private or national health system. A list of drug, scan and procedure prices compiled by the International Federation of Health Plans, a global network of health insurers, found that the United States came out the most costly in all 21 categories — and often by a huge margin.

Americans pay, on average, about four times as much for a hip replacement as patients in Switzerland or France and more than three times as much for a Caesarean section as those in New Zealand or Britain. The average price for Nasonex, a common nasal spray for allergies, is $108 in the United States compared with $21 in Spain. The costs of hospital stays here are about triple those in other developed countries, even though they last no longer, according to a recent report by the Commonwealth Fund, a foundation that studies health policy.

While the United States medical system is famous for drugs costing hundreds of thousands of dollars and heroic care at the end of life, it turns out that a more significant factor in the nation’s $2.7 trillion annual health care bill may not be the use of extraordinary services, but the high price tag of ordinary ones. “The U.S. just pays providers of health care much more for everything,” said Tom Sackville, chief executive of the health plans federation and a former British health minister.

Colonoscopies offer a compelling case study. They are the most expensive screening test that healthy Americans routinely undergo — and often cost more than childbirth or an appendectomy in most other developed countries. Their numbers have increased manyfold over the last 15 years, with data from the Centers for Disease Control and Prevention suggesting that more than 10 million people get them each year, adding up to more than $10 billion in annual costs.

Largely an office procedure when widespread screening was first recommended, colonoscopies have moved into surgery centers — which were created as a step down from costly hospital care but are now often a lucrative step up from doctors’ examining rooms — where they are billed like a quasi operation. They are often prescribed and performed more frequently than medical guidelines recommend.

The high price paid for colonoscopies mostly results not from top-notch patient care, according to interviews with health care experts and economists, but from business plans seeking to maximize revenue; haggling between hospitals and insurers that have no relation to the actual costs of performing the procedure; and lobbying, marketing and turf battles among specialists that increase patient fees.

While several cheaper and less invasive tests to screen for colon cancer are recommended as equally effective by the federal government’s expert panel on preventive care — and are commonly used in other countries — colonoscopy has become the go-to procedure in the United States. “We’ve defaulted to by far the most expensive option, without much if any data to support it,” said Dr. H. Gilbert Welch, a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice.

In coming months, The New York Times will look at common procedures, drugs and medical encounters to examine how the economic incentives underlying the fragmented health care market in the United States have driven up costs, putting deep economic strains on consumers and the country.

Hospitals, drug companies, device makers, physicians and other providers can benefit by charging inflated prices, favoring the most costly treatment options and curbing competition that could give patients more, and cheaper, choices. And almost every interaction can be an opportunity to send multiple, often opaque bills with long lists of charges: $100 for the ice pack applied for 10 minutes after a physical therapy session, or $30,000 for the artificial joint implanted in surgery.

The United States spends about 18 percent of its gross domestic product on health care, nearly twice as much as most other developed countries. The Congressional Budget Office has said that if medical costs continue to grow unabated, “total spending on health care would eventually account for all of the country’s economic output.” And it identified federal spending on government health programs as a primary cause of long-term budget deficits.

While the rise in health care spending in the United States has slowed in the past four years — to about 4 percent annually from about 8 percent — it is still expected to rise faster than the gross domestic product. Aging baby boomers and tens of millions of patients newly insured under the Affordable Care Act are likely to add to the burden.

With health insurance premiums eating up ever more of her flat paycheck, Ms. Yapalater, a customer relations specialist for a small Long Island company, recently decided to forgo physical therapy for an injury sustained during Hurricane Sandy because of high out-of-pocket expenses. She refused a dermatology medication prescribed for her daughter when the pharmacist said the co-payment was $130. “I said, ‘That’s impossible, I have insurance,’ ” Ms. Yapalater recalled. “I called the dermatologist and asked for something cheaper, even if it’s not as good.”

The more than $35,000 annually that Ms. Yapalater and her employer collectively pay in premiums — her share is $15,000 — for her family’s Oxford Freedom Plan would be more than sufficient to cover their medical needs in most other countries. She and her husband, Jeff, 63, a sales and marketing consultant, have three children in their 20s with good jobs. Everyone in the family exercises, and none has had a serious illness.

Like the Yapalaters, many other Americans have habits or traits that arguably could put the nation at the low end of the medical cost spectrum. Patients in the United States make fewer doctors’ visits and have fewer hospital stays than citizens of many other developed countries, according to the Commonwealth Fund report. People in Japan get more CT scans. People in Germany, Switzerland and Britain have more frequent hip replacements. The American population is younger and has fewer smokers than those in most other developed countries. Pushing costs in the other direction, though, is that the United States has relatively high rates of obesity and limited access to routine care for the poor.

A major factor behind the high costs is that the United States, unique among industrialized nations, does not generally regulate or intervene in medical pricing, aside from setting payment rates for Medicare and Medicaid, the government programs for older people and the poor. Many other countries deliver health care on a private fee-for-service basis, as does much of the American health care system, but they set rates as if health care were a public utility or negotiate fees with providers and insurers nationwide, for example.

“In the U.S., we like to consider health care a free market,” said Dr. David Blumenthal, president of the Commonwealth Fund and a former adviser to President Obama. ”But it is a very weird market, riddled with market failures.”

Consider this:

Consumers, the patients, do not see prices until after a service is provided, if they see them at all. And there is little quality data on hospitals and doctors to help determine good value, aside from surveys conducted by popular Web sites and magazines. Patients with insurance pay a tiny fraction of the bill, providing scant disincentive for spending.

Even doctors often do not know the costs of the tests and procedures they prescribe. When Dr. Michael Collins, an internist in East Hartford, Conn., called the hospital that he is affiliated with to price lab tests and a colonoscopy, he could not get an answer. “It’s impossible for me to think about cost,” he said. “If you go to the supermarket and there are no prices, how can you make intelligent decisions?”

Instead, payments are often determined in countless negotiations between a doctor, hospital or pharmacy, and an insurer, with the result often depending on their relative negotiating power. Insurers have limited incentive to bargain forcefully, since they can raise premiums to cover costs.

“It all comes down to market share, and very rarely is anyone looking out for the patient,” said Dr. Jeffrey Rice, the chief executive of Healthcare Blue Book, which tracks commercial insurance payments. “People think it’s like other purchases: that if you pay more you get a better car. But in medicine, it’s not like that.”

A Market Is Born

As the cases of bottled water and energy drinks stacked in the corner of the Yapalaters’ dining room attest, the family is cost conscious — especially since a photography business long owned by the family succumbed eight years ago in the shift to digital imaging. They moved out of Manhattan. They rent out their summer home on Fire Island. They have put off restoring the wallpaper in their dining room.

And yet, Ms. Yapalater recalled, she did not ask her doctors about the cost of her colonoscopy because it was covered by insurance and because “if a doctor says you need it, you don’t ask.” In many other countries, price lists of common procedures are publicly available in every clinic and office. Here, it can be nearly impossible to find out.

Until the last decade or so, colonoscopies were mostly performed in doctors’ office suites and only on patients at high risk for colon cancer, or to seek a diagnosis for intestinal bleeding. But several highly publicized studies by gastroenterologists in 2000 and 2001 found that a colonoscopy detected early cancers and precancerous growths in healthy people.

They did not directly compare screening colonoscopies with far less invasive and cheaper screening methods, including annual tests for blood in the stool or a sigmoidoscopy, which looks at the lower colon where most cancers occur, every five years.

“The idea wasn’t to say these growths would have been missed by the other methods, but people extrapolated to that,” said Dr. Douglas Robertson, of the Department of Veterans Affairs, which is beginning a large trial to compare the tests.

Experts agree that screening for colon cancer is crucial, and a colonoscopy is intuitively appealing because it looks directly at the entire colon and doctors can remove potentially precancerous lesions that might not yet be prone to bleeding. But studies have not clearly shown that a colonoscopy prevents colon cancer or death better than the other screening methods. Indeed, some recent papers suggest that it does not, in part because early lesions may be hard to see in some parts of the colon.

But in 2000, the American College of Gastroenterology anointed colonoscopy as “the preferred strategy” for colon cancer prevention — and America followed.

Katie Couric, who lost her husband to colorectal cancer, had a colonoscopy on television that year, giving rise to what medical journals called the “Katie Couric effect”: prompting patients to demand the test. Gastroenterology groups successfully lobbied Congress to have the procedure covered by Medicare for cancer screening every 10 years, effectively meaning that commercial insurance plans would also have to provide coverage.

Though Medicare negotiates for what are considered frugal prices, its database shows that it paid an average of $531 to gastroenterologists for a colonoscopy in 2011. But that does not include the payments for associated facility fees and to anesthesiologists, which could double the cost or more. “As long as it’s deemed medically necessary,” said Jonathan Blum, the deputy administrator at the Centers for Medicare and Medicaid Services, “we have to pay for it.”

If the American health care system were a true market, the increased volume of colonoscopies — numbers rose 50 percent from 2003 to 2009 for those with commercial insurance — might have brought down the costs because of economies of scale and more competition. Instead, it became a new business opportunity.

Profits Climb

Just as with real estate, location matters in medicine. Although many procedures can be performed in either a doctor’s office or a separate surgery center, prices generally skyrocket at the special centers, as do profits. That is because insurers will pay an additional “facility fee” to ambulatory surgery centers and hospitals that is intended to cover their higher costs. And anesthesia, more monitoring, a wristband and sometimes preoperative testing, along with their extra costs, are more likely to be added on.

In Mount Kisco, N.Y., Maggie Christ had two colonoscopies two months apart, after her doctor decided it was best to remove a growth that had been discovered during the first procedure. They were performed by the same doctor, with the same sedation. The first, in an outpatient surgery department, was billed at $9,142.84 (insurance paid $5,742.67). The second, in the doctor’s office, was billed at $5,322.76 (insurance eventually paid $2,922.63) because there was no facility fee. “The location was about accommodating the doctor’s schedule,” Ms. Christ said. “Why would an insurance company approve this?”

Ms. Yapalater, a trim woman who looks far younger than her 64 years, had two prior colonoscopies in doctor’s offices (one turned up a polyp that required a five-year follow-up instead of the usual 10 years). But for her routine colonoscopy this January, Ms. Yapalater was referred to Dr. Felice Mirsky of Gastroenterology Associates, a group practice in Garden City, N.Y., that performs the procedures at an ambulatory surgery center called the Long Island Center for Digestive Health. The doctors in the gastroenterology practice, which is just down the hall, are owners of the center.

“It was very fancy, with nurses and ORs,” Ms. Yapalater said. “It felt like you were in a hospital.”

That explains the fees. “If you work as a ‘facility,’ you can charge a lot more for the same procedure,” said Dr. Soeren Mattke, a senior scientist at the RAND Corporation. The bills to Ms. Yapalater’s insurer reflected these charges: $1,075 for the gastroenterologist, $2,400 for the anesthesia — and $2,910 for the facility fee.

When popularized in the 1980s, outpatient surgical centers were hailed as a cost-saving innovation because they cut down on expensive hospital stays for minor operations like knee arthroscopy. But the cost savings have been offset as procedures once done in a doctor's office have filled up the centers, and bills have multiplied.

It is a lucrative migration. The Long Island center was set up with the help of a company based in Pennsylvania called Physicians Endoscopy. On its Web site, the business tells prospective physician partners that they can look forward to “distributions averaging over $1.4 million a year to all owners,” “typically 100 percent return on capital investment within 18 months” and “a return on investment of 500 percent to 2,000 percent over the initial seven years.”

Dr. Leonard Stein, the senior partner in Gastroenterology Associates and medical director of the surgery center, declined to discuss patient fees or the center’s profits, citing privacy issues. But he said the center contracted with insurance companies in the area to minimize patients' out-of-pocket costs.

In 2009, the last year for which such statistics are available, gastroenterologists performed more procedures in ambulatory surgery centers than specialists in any other field. Once they bought into a center, studies show, the number of procedures they performed rose 27 percent. The specialists earn an average of $433,000 a year, among the highest paid doctors, according to Merritt Hawkins & Associates, a medical staffing firm.

Hospitals and doctors say that critics should not take the high “rack rates” in bills as reflective of the cost of health care because insurers usually pay less. But those rates are the starting point for negotiations with Medicare and private insurers. Those without insurance or with high-deductible plans have little weight to reduce the charges and often face the highest bills. Nassau Anesthesia Associates — the group practice that handled Ms. Yapalater’s sedation — has sued dozens of patients for nonpayment, including Larry Chin, a businessman from Hicksville, N.Y., who said in court that he was then unemployed and uninsured. He was billed $8,675 for anesthesia during cardiac surgery.

For the same service, the anesthesia group accepted $6,970 from United Healthcare, $5,208.01 from Blue Cross and Blue Shield, $1,605.29 from Medicare and $797.50 from Medicaid. A judge ruled that Mr. Chin should pay $4,252.11.

Ms. Yapalater’s insurer paid $1,568 of the $2,400 anesthesiologist’s charge for her colonoscopy, but many medical experts question why anesthesiologists are involved at all. Colonoscopies do not require general anesthesia — a deep sleep that suppresses breathing and often requires a breathing tube. Instead, they require only “moderate sedation,” generally with a Valium-like drug or a low dose of propofol, an intravenous medicine that takes effect quickly and wears off within minutes. In other countries, such sedative mixes are administered in offices and hospitals by a wide range of doctors and nurses for countless minor procedures, including colonoscopies.

Nonetheless, between 2003 and 2009, the use of an anesthesiologist for colonoscopies in the United States doubled, according to a RAND Corporation study published last year. Payments to anesthesiologists for colonoscopies per patient quadrupled during that period, the researchers found, estimating that ending the practice for healthy patients could save $1.1 billion a year because “studies have shown no benefit” for them, Dr. Mattke said.

But turf battles and lobbying have helped keep anesthesiologists in the room. When propofol won the approval of the Food and Drug Administration in 1989 as an anesthesia drug, it carried a label advising that it “should be administered only by those who are trained in the administration of general anesthesia” because of concerns that too high a dose could depress breathing and blood pressure to a point requiring resuscitation.

Since 2005, the American College of Gastroenterology has repeatedly pressed the F.D.A. to remove or amend the restriction, arguing that gastroenterologists and their nurses are able to safely administer the drug in lower doses as a sedative. But the American Society of Anesthesiologists has aggressively lobbied for keeping the advisory, which so far the F.D.A. has done.

A Food and Drug Administration spokeswoman said that the label did not necessarily require an anesthesiologist and that it was safe for the others to administer propofol if they had appropriate training. But many gastroenterologists fear lawsuits if something goes wrong. If anything, that concern has grown since Michael Jackson died in 2010 after being given propofol, along with at least two other sedatives, without close monitoring.

‘Too Much for Too Little’

The Department of Veterans Affairs, which performs about a quarter-million colonoscopies annually, does not routinely use an anesthesiologist for screening colonoscopies. In Austria, where colonoscopies are also used widely for cancer screening, the procedure is performed, with sedation, in the office by a doctor and a nurse and “is very safe that way,” said Dr. Monika Ferlitsch, a gastroenterologist and professor at the Medical University of Vienna, who directs the national program on quality assurance.

But she noted that gastroenterologists in Austria do have their financial concerns. They are complaining to the government and insurers that they cannot afford to do the 30-minute procedure, with prep time, maintenance of equipment and anesthesia, for the current approved rate — between $200 and $300, all included. “I think the cheapest colonoscopy in the U.S. is about $950,” Dr. Ferlitsch said. “We’d love to get half of that.”

Dr. Cesare Hassan, an Italian gastroenterologist who is the chairman of the Guidelines Committee of the European Society of Gastrointestinal Endoscopy, noted that studies in Europe had estimated that the procedure cost about $400 to $800 to perform, including biopsies and sedation. “The U.S. is paying way too much for too little — it leads to opportunistic colonoscopies,” done for profit rather than health, he said.

Some doctors in the United States are campaigning against the overuse of the procedure, like Dr. James Goodwin, a geriatrician at the University of Texas. He estimates that about a quarter of Medicare patients undergo the screening test more often than recommended, even though the risks of complications, like long recovery times and poor tolerance of sedation, increase for older people. Routine screening is not recommended for all people over 75.

And some large employers have begun fighting back on costs. Three years ago, Safeway realized that it was paying between $848 and $5,984 for a colonoscopy in California and could find no link to the quality of service at those extremes. So the company established an all-inclusive “reference price” it was willing to pay, which it said was set at a level high enough to give employees access to a range of high-quality options. Above that price, employees would have to pay the difference. Safeway chose $1,250, one-third the amount paid for Ms. Yapalater’s procedure — and found plenty of doctors willing to accept the price.

Still, the United States health care industry is nimble at protecting profits. When Aetna tried in 2007 to disallow payment for anesthesiologists delivering propofol during colonoscopies, the insurer backed down after a barrage of attacks from anesthesiologists and endoscopy groups. With Medicare contemplating lowering facility fees for ambulatory surgery centers, experts worry that physician-owners will sell the centers to hospitals, where fees remain higher.

And then there is aggressive marketing. People who do not have insurance or who are covered by Medicaid typically get far less colon cancer screening than they need. But those with insurance are appealing targets.

Nineteen months after Matt Meyer, who owns a saddle-fitting company near Keene, N.H., had his first colonoscopy, he received a certified letter from his gastroenterologist. It began, “Our records show that you are due for a repeat colonoscopy,” and it advised him to schedule an appointment or “allow us to note your reason for not scheduling.” Although his prior test had found a polyp, medical guidelines do not recommend such frequent screening.

“I have great doctors, but the economics is daunting,” Mr. Meyer said in an interview. “A computer-generated letter telling me to come in for a procedure that costs more than $5,000? It was the weirdest thing.”

Jo Craven McGinty contributed reporting.

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