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Comment & Response
July 20, 2021

Backstop Price Caps in Commercial Health Care Markets—Reply

Author Affiliations
  • 1Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
  • 2Harvard Medical School and Harvard Business School, Boston, Massachusetts
JAMA. 2021;326(3):277. doi:10.1001/jama.2021.6812

In Reply Mr Lusk and Dr McDevitt argue that backstop price caps on the highest of health care prices would be “a blunt instrument for restraining prices.” Their assessment is based on 2 misperceptions of the caps we discussed in our recent Viewpoint.1 First, the approach we outlined would not cut prices equally across the board for all services. On the contrary, backstop price caps are intended to be service specific, so that the amount trimmed depends on the amount by which the price for a specific service exceeds the cap. By design, backstop price caps would apply only to the highest prices within each service. Second, we illustrated a cap approach based on a multiple of the 20th percentile of commercial rates, which translated to about 5 times Medicare fees, but is not based on Medicare. This strategy allows market forces to contribute to the level of the caps, although the use of Medicare rates is administratively simpler.2 We apologize if our Viewpoint was not clear on these points.

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