Obamacare Rules, Hospital Consolidations Blamed for Skyrocketing Healthcare Costs

Hospital consolidations and Obamacare rules that limit competition are causing a dramatically rapid spike in healthcare costs, tripling the rise in overall inflation, a group of medical experts is warning lawmakers.More than 2,000 hospital and health systems have merged over the past 25 years, and the share of independent hospitals has declined from 90 percent in 1970 to 32 percent in 2019 according to figures from the health policy research nonprofit, KFF.In 2024, just one or two health systems controlled the entire market for inpatient hospital care in 47 percent of metropolitan areas, while in 83 percent of markets, only one or two health systems controlled greater than 75 percent of hospital care.A visiting fellow at the Hoover Institution, Johns Hopkins University professor, Dr. Brian J. Miller, says it is a serious, pressing, and persistent concern. “Many healthcare markets are highly consolidated, resulting in a loss of price and non-price competition for consumers, employers, workers, and taxpayers,” Dr. Miller told a House Judiciary Committee subcommittee on Monday.Dr. Miller blames federal policy choices for accelerating and favoring consolidation. “The government has banned or severely restricted market entry, placing a heavy brake on competition and replacing it with statutory prohibition or regulation,” Dr. Miller said at the field hearing held at the Marriott City Center, at Charlotte, North Carolina.A small think tank that has advocated for spending reductions in government healthcare programs, Paragon Health Institute, agrees that government policy has protected hospitals from competition. The group’s founder, Brian Blase, says hospitals account for about one-third of national health expenditures, and Americans spent more than $1.6 trillion on hospital care in 2024, more than five percent of the U.S. economy that year.“The greatest affordability threat in American health care is the extraordinary growth of hospital prices,” Mr. Blase said. He says that federal rules subsidize inefficient hospital systems and rewards consolidation rather than productivity. He says the hospital sector is both the largest component of health spending and the sector where price growth has been most extreme.An April Paragon study found that from January 2000 through December 2025, hospital prices rose more than three times as fast as overall inflation. Hospital-service prices increased 281 percent while overall inflation increased 93 percent over the period, according to Paragon.The study also found that all medical care services increased 147 percent during that time, meaning health care affordability is disproportionately concentrated in hospitals rather than uniformly spread across the health sector.A major cause of the increased costs is the modern hospital sector being increasingly dominated by regional or multistate health systems that own hospitals, physician practices, outpatient departments, imaging centers, infusion sites, and other facilities. More than 50 percent of practicing physicians in America are now hospital employees, according to research by Physicians Advocacy Institute. The institute says the shift accelerated after the implementation of the Affordable Care Act, widely known as Obamacare. The law’s payment and regulatory framework favored larger integrated systems and encouraged hospitals to acquire independent physician practices.Mr. Blase says economic research finds that such consolidation raises prices without commensurate improvements in quality, with mergers between nearby competing hospitals often producing price increases exceeding 20 percent in concentrated markets. He says an Obamacare restriction on new physician-owned hospitals has shielded competition and driven consolidation. A big issue is a restriction on Medicare payments to new physician-owned hospitals. Experts say it is not viable for a new hospital to survive without being part of the Medicare payment system.The Affordable Care Act also requires a long process to seek government permission before providers can open facilities, add beds, or offer certain services. Entrenched hospital systems then use the regulatory process to challenge and potentially block new entrants.“If policymakers want to make health care more affordable for workers, employers, taxpayers, and patients, they should begin with the sector that consumes the most money and has experienced the most extraordinary price growth,” Mr. Blase said.Mr. Blase — who worked as a special assistant on the White House’s National Economic Council during President Trump’s first term — suggests that price transparency is necessary for competition. He says healthcare institutions have historically hidden reliable pricing.Congress could help drive hospitals and healthcare systems would be more likely to have price transparency if patients had more power in the payment process, Mr. Blase added. He asserted that expanded access to health savings accounts and individual coverage health reimbursement arrangements would help drive the change. “If patients have power over their healthcare financing, the market will respond by catering to their preferences,” Mr. Blase said. “Markets work best when people control their own spending and are sensitive to prices and price changes.”Democrats on the committee did not attend the hearing, claiming it was a political distraction and does not address substantive reforms for the healthcare system. A Democratic-aligned health care advocacy group, Protect Our Care, claims that instead of holding executives and corporations accountable for driving up health care costs, Mr. Trump granted clemency to healthcare fraudsters while congressional Republicans gave tax breaks to health corporations. The group also says the Trump administration has spent the past two years firing inspectors general who root out corporate fraud.“This hearing is a desperate attempt to shift blame and dodge accountability. The truth is, their constituents are losing faith. Hospitals are closing. Healthcare costs are skyrocketing. And now these Republican members of Congress are scrambling to salvage whatever credibility they have left. For millions of Americans, the damage is already done,” the president of Protect Our Care, Brad Woodhouse, said in a statement.

Obamacare Rules, Hospital Consolidations Blamed for Skyrocketing Healthcare Costs

Obamacare Rules, Hospital Consolidations Blamed for Skyrocketing Healthcare Costs

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