A New Health Care Initiative, an Old Problem: Unchecked Hospital Costs

As it stands, hospital prices are out of control, and every American has felt the impact. Insurance premiums rise, deductibles soar, and employers struggle to keep coverage affordable. Taxpayers are so graciously left to pick up the rest through Medicare and Medicaid. Yet, too few are talking about the real culprit: hospitals themselves.

Yesterday’s announcement of the President’s new health care initiative underscores just how urgent this moment has become. Policymakers across the political spectrum now acknowledge that affordability—not access alone—is the defining health care challenge facing American families. But any serious reform effort must begin with a clear-eyed assessment of what is actually driving costs. If the Administration’s initiative is to deliver real relief, it cannot ignore the single largest and fastest-growing source of health care inflation: hospital pricing.

The numbers tell the story. Hospital care accounts for roughly one-third of all U.S. health spending. That makes it the single largest driver of costs in the system. And unlike other wealthy nations, Americans do not consume dramatically more care. The difference is what we pay. Routine procedures cost multiples of what they do abroad. Over the last two decades, hospital prices have surged far faster than wages, inflation, or overall health spending. These increases are not minor—they are the engine driving skyrocketing healthcare costs.

Market power makes the problem worse. Hospital consolidation has left many regions dominated by one or two systems. Competition has disappeared. Without rivals to keep them in check, hospitals raise prices at will, leaving families, employers, and taxpayers to all pay the price. Nonprofit hospitals are not exempt from blame. They receive generous tax breaks meant to benefit communities, yet executive pay has skyrocketed, and charitable programs often fail to match the value of their subsidies. The system is tilted in favor of the hospital, not the public.

Unfortunately, transparency has failed to rein in costs. Federal rules require hospitals to post cash prices and negotiated rates. In practice, hospitals fail to comply, and the data is inconsistent, incomplete, and often indecipherable. Patients, employers, and policymakers cannot use it. Without enforcement and standardization, transparency has become little more than a cosmetic fix while prices continue to climb.

Price growth has long outpaced cost growth. Since the early 2000s, hospital prices have more than tripled. Labor and supply costs have risen, yes, but nothing near the pace of pricing. Hospitals have expanded revenues and profit margins while families struggle to keep up. Rising hospital prices are not a side issue; they are the central driver of healthcare unaffordability.

As the Administration rolls out its health care agenda, Congress now faces a clear test of seriousness. If affordability is truly the goal, hospital pricing cannot remain the untouchable third rail of health policy. The President’s announcement creates an opportunity—not for another round of symbolic reforms—but for a long-overdue reckoning with the institutional actors that set prices, consolidate markets, and capture subsidies while families fall further behind.

The solution is straightforward. Policymakers must confront hospital pricing head-on, and that could begin next week at dual House hearings. The list of fixes is simple: restore competition where consolidation reigns, hold nonprofit hospitals accountable for the public benefits they claim, and enforce meaningful, standardized price transparency. Families, workers, and taxpayers cannot wait any longer.

The facts in this case are clear – uncontrollably spiraling hospital prices dictate the cost of insurance, squeeze household budgets, and strain public programs. If we want affordable healthcare, tackling hospital pricing is not optional; it is essential. Anything less ensures families will keep paying more for less care.

The President’s health care announcement makes one thing unmistakable: the era of ignoring affordability is over. But success will depend on whether policymakers are willing to follow the evidence where it leads. Hospital prices play a massive role in dictating what Americans pay for coverage and care. Any initiative that fails to address that reality will leave families exactly where they are today: paying more, getting less, and wondering why reform never seems to reach the institutions with the greatest power to change outcomes.