It is refreshing to see Congress once again try to tackle the affordability of American healthcare, even if it does seem an endless exercise that always occurs in a presidential election year. Healthcare is unaffordable for many reasons, thanks to the massive amount of taxpayer money in the system that serves to inflate costs. It is important for politicians to take action to protect taxpayers from some in the healthcare industry taking advantage of the system. One set of entities that has taken the taxpayer to the cleaners is hospitals.
Healthcare expenditures have been spiraling out of control for decades. They now represent more than $5 trillion in annual costs, a whopping $32,000 for each American family of four. This number represents about 18% of the United States’s gross domestic product, or just short of 1 in 5 dollars spent in the U.S. economy. It is political malpractice for Congress not to do more to defend taxpayers and voters who are unhappy with both political parties in Congress at the moment.
Some in Congress are taking note. Recent House Energy and Commerce and House Ways and Means committee hearings certainly satisfied some of their constitutional mandate to represent the will of the people. Future hearings are scheduled, so hopes are high that further sessions will examine and address the damage caused by the most persistent drivers of American healthcare costs: hospitals.
While American hospitals account for a third of annual healthcare expenses, they routinely thumb their collective nose at federal transparency pricing statutes, charge poor people more for drugs they themselves received at cost, and, in several instances, stash in their general funds billions in federal grants they solicit precisely for the benefit of the needy. In addition, hospital bills also tend to feature a whole host of surprise and phantom bills. One problem seems to be that there is not enough policing of hospitals to keep costs down.
This added cost to taxpayers, thanks to hospitals, is an outrage, given that our nation faces a $38 trillion collective debt and annual deficits approaching $2 trillion. Taxpayers are paying out-of-pocket expenses for healthcare, while the government is running up a huge tab of borrowed money for those who are swindling the system. healthcare affordability is a problem that Congress needs to address loudly.
In reality, few experiences in modern American life engender more fear and anxiety than a trip to the hospital, and not just because of the underlying or immediate problems that compel one to go. Hospitals are often crowded, feature much longer wait times, and offer less frequent, shorter doctor interactions, all while delivering care that has steadily declined, relative not only to the recent past but also to every other developed country in the world.
The arrogance, bloat, and disregard from hospitals have inflated all Americans’ healthcare costs while diminishing their access, health, and happiness. But the toll has been greatest on the country’s seniors, who have seen their healthcare expenses rise at a far faster rate than their retirement savings, Social Security benefits, or cost-of-living adjustments.
Coupled with out-of-pocket hospital bills and other unforeseen medical expenses, retirees who had responsibly planned their later years can now hardly manage, suffering the burdens of a system completely out of whack and beyond anyone’s control. Hospital costs have even eclipsed our already dramatic national inflation over the past 25 years. Since 2000, hospital prices have ballooned an alarming 270%, dwarfing the growth of the greater economy.
Mergers of companies are not inherently bad, but when the companies are reliant on taxpayer cash, a close look at hospital mergers is in order. Hospital mergers continue to explode across the country, resulting in a real and well-documented consolidation crisis in the American healthcare landscape, where patient care is a secondary concern. Some mergers are good for the economy and create economies of scale, but a hands-off attitude from the government should also extend to wholly privately owned companies that are not reliant on taxpayer cash for profits.
The hospital merger trend has accelerated, creating “mega hospitals” that reduce and distort competition, allowing larger systems to dictate pricing over insurers, and by extension, patients and taxpayers. The result is that seniors lose out when they need medical care most, absorbing mass financial pain via higher Medicare cost-sharing, rising Medigap premiums, and increased out-of-pocket burdens.
THE HERITAGE FOUNDATION STILL LEADS THE CONSERVATIVE MOVEMENT
Predictably, too, as the hospital systems grow and increase in dominance, pricing is entirely divorced from value; seniors are routinely charged wildly different amounts for the same procedure, regardless of outcome, and often determined solely by geography.
Congress needs to buckle down and study these problems to find solutions that benefit those who use hospitals and taxpayers.
Brian Darling is a former director of Senate relations and senior fellow for government studies at the Heritage Foundation (2005-2012).