healthcare spending, accounting for 31% of National Health Expenditures, a share far larger than that of prescription drugs (9%).
Commercial hospital prices are significantly inflated, averaging over 250% of Medicare rates for similar services, and continue to grow at a healthy rate, driving overall spending increases.
A profound lack of transparency, enabled by complex health system corporate structures and intermediaries, obscures the true cost of care and leads to massive price variations for identical procedures.
State-level policies, such as price caps benchmarked to Medicare (e.g., Oregon's 200% cap for its state employee plan), are emerging as effective strategies to control costs without disrupting care access or shifting costs to other payers.
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Concerns Raised
Unsustainable growth in commercial hospital prices is the primary driver of rising healthcare costs for employers and families.
Lack of genuine price transparency and complex corporate structures prevent a functional, competitive healthcare market.
Intermediaries in the payment chain can retain a significant portion of healthcare dollars, inflating costs without adding commensurate value.
Hospital consolidation has given large systems immense market power to dictate high prices.
Opportunities Identified
Implementing state-level hospital price caps benchmarked to Medicare rates to directly control costs.
Enacting federal legislation, like the Patients Deserve Price Tags Act, to grant self-funded employers full access to their claims data.
Using newly available hospital price transparency data to expose extreme price variations and empower purchasers in negotiations.
Shifting policy focus from prescription drugs to the larger issue of hospital and physician service pricing.