May 24, 2024

Congress can lower health care costs by holding hospital systems accountable

$629 bill for a 1-year-old to receive a Band-Aid. A $722.50 charge for every push of medicine through an IV. A $17,850 bill for a single drug test.

These are real stories of patients charged exorbitant prices for services. There are numerous examples like this across the country. Far from being fluke occurrences, the hospital industry has institutionalized anti-competitive practices that play a leading role in the health care affordability crisis. Over the last ten years, the cost of providing employee coverage has increased 47 percent, with hospital care serving as the top driver of health care costs.

The patients and families bearing the brunt of these costs agree that it’s time to take action. According to a recent national survey, nearly 80 percent of voters say the prices that hospitals charge for care are rising to unreasonable levels.

While it was once unthinkable that Washington would challenge the powerful hospital lobby, this issue has become a focus of the 118th Congress. A series of major hearings has shed light on how corporate hospital systems dramatically mark up prices for services and get around transparency requirements. Patients are rarely aware of the costs they will incur until they actually receive a bill. And with top hospitals charging a more than 5x markup, it’s no surprise that the industry is desperate to keep pricing abuses hidden.

These unreasonable price increases hurt patients seeking care — and they are downright alarming for employers who cover the cost of health coverage for millions of workers nationwide. It’s getting harder to provide high quality health benefits and even harder to compete for workers and increase wages.
A major focus of this congressional scrutiny is the growing practice of corporate hospitals establishing local monopolies and leveraging their market dominance to charge patients more. With hospital consolidation driving down competition, there’s no pressure for hospitals to bring costs back within reach for employees, retirees and their families. Patients are right to demand a more competitive landscape: prices at monopoly hospitals are 12 percent higher than in markets with four or more competitors.

One way that corporate hospitals use acquisitions to take advantage of patients is by charging exorbitant ‘facility fees’ for care received at their doctor’s office — not because a doctor’s office now resides inside a hospital, but simply because the hospital system acquired the practice. When a physician’s office is acquired by a hospital system, the prices increase on average by 14.1 percent. With site-neutral reforms that require the same rate for services regardless of where they are delivered, we could reduce cost-sharing and premiums by more than $470 billion over 10 years.

The days of these anti-competitive practices going unchecked may soon be numbered. In the House, both the Energy and Commerce and Education and Workforce committees have advanced bipartisan measures to crack down on dishonest billing. Lawmakers in both chambers have come together across the aisle to introduce measures to increase transparency and promote competition. This is encouraging progress, but much more urgency in Washington is needed to stem these unreasonable cost increases. Hospitals will stop at nothing to protect their fiefdoms and the profit margins they generate.

Through common-sense reforms, we can lower costs for consumers and hold corporate hospital systems accountable for making it harder for us to provide affordable coverage. That means reining in unreasonable markups, ensuring honest billing, promoting competition, and delivering real transparency in pricing — so patients are treated fairly and reasonably, whether they receive a test, a treatment, or even just a Band-Aid.

Michael Thompson is president and CEO of National Alliance of Healthcare Purchaser Coalitions and Tom Lussier is administrator of the Public Sector Health Care Roundtable.

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