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Health Care Payment and Financing
In Their Own Words
How to Make Health Care Affordable: What Democrats Should Do Next
An LDI Expert Offers Five Cost Control Measures As Congress Continues Its Affordability Debate
Print:
The following excerpt is from an op-ed originally published in the Washington Post.
Democrats succeeded in elevating health care affordability to the top of the national agenda during the shutdown fight. Indeed, they forced President Donald Trump to offer proposals — albeit wrongheaded ones — under the rubric of affordability. Count that as a win.
But simply defending the Affordable Care Act does not a health plan make. About 150 million Americans have employer-sponsored insurance, where a family plan now costs workers an average of nearly $7,000 per year from their wages and $27,000 in total — the equivalent of a new Toyota Corolla every year. Half of Americans worry that they cannot afford health care. Congress — and the American public — desperately need new ideas.
While Trump and the Republicans dither, Democrats can seize the advantage and craft a more comprehensive health care affordability bill. These five reforms can be immediately implemented to control costs:
First, hospital prices need to be capped and standardized across the country, with the only variability being cost of labor and rent in different locales. In 2023, the last year for which official data are available, hospitals consumed about a third of all health spending — over $1.5 trillion. Since 2000, hospital prices have gone up faster than any other segment of the economy. In addition, the cost of the same procedure can vary by tenfold among hospitals, depending which insurer is paying. Procedures performed at hospitals often cost tens of thousands more than identical ones done at doctors’ offices or ambulatory surgical centers.
The federal government should embrace what was originally a Republican idea: Cap hospital prices as a percentage of Medicare prices, with higher caps in more competitive markets. This would reward competition among hospitals and lower bills. Such caps have saved money in Oregon and a similar policy was recently signed into law in Indiana. Additionally, the government should expand site-neutral payments to equalize prices for a medical service regardless of where it is provided, a reform that has been advanced by the Trump administration. Site neutral payments alone would save Medicare an estimated $150 billion over 10 years.
Read the full op-ed here.
Author
Ezekiel J. Emanuel, MD, PhD
Diane v.S. Levy and Robert M. Levy University Professor, Perelman School of Medicine, Wharton School
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