OPINION:
On Wednesday, the House Energy and Commerce subcommittee on health will hold a hearing titled “Lowering Health Care Costs for All Americans: An Examination of the U.S. Provider Landscape.”
Having served in Congress, where I advocated across multiple sectors for legislative solutions to promote affordability for all Americans, I know how important hearings like this can be. They shape the conversation around health care costs and influence the policies that ultimately affect patients, providers, employers and taxpayers.
This hearing presents an important opportunity for lawmakers to address hospital prices, which are among the most significant and often overlooked drivers of rising health care costs.
Lack of price transparency at American hospitals is an enormous problem for patients and their families. Hospital prices have increased by more than 280% since 2000, more than three times the rate of overall inflation. These increases have consistently outpaced the cost growth of other medical services and nearly every major household expense.
Hospitals are often the first domino in the chain of health care costs. When hospital prices rise, the impact flows through the entire system. Insurance premiums climb, employers face higher coverage costs, and patients ultimately get stuck with larger bills.
At the same time, more than half of hospitals in the United States operate as nonprofit institutions. In exchange for exemptions from federal, state and local taxes and the tax benefits worth tens of billions of dollars each year, these hospitals are expected to provide meaningful community benefits, including charity care for patients who cannot afford treatment.
Independent analyses, however, suggest that many nonprofit hospitals are falling short of that expectation.
Studies have found that more than half of nonprofit hospitals spend less on community benefits than the value of their tax exemptions, creating a nationwide “fair share deficit” estimated to be $11.5 billion to $14.2 billion annually.
To put that into perspective, that amount could eliminate medical debt for roughly 10 million Americans.
Part of the issue lies in how charity care is defined and reported.
Under current accounting rules, hospitals can count unreimbursed Medicaid payments as charity care, even when they charge private insurers several times the Medicaid rate for the exact same procedures. In some cases, hospitals charge private insurers three to 60 times what Medicaid pays.
That kind of pricing disparity raises legitimate questions about transparency and fairness.
The financial consequences for patients can be severe. Medical debt remains one of the leading causes of personal bankruptcy in the United States. For many families, unpaid medical bills damage credit scores, limit access to housing or loans, and in some cases even lead to wage garnishment.
Aggressive debt collection practices by hospitals have also drawn scrutiny. Reports show that roughly two-thirds of hospitals use legal actions such as lawsuits, liens and wage garnishment to collect unpaid bills. Some large nonprofit hospital systems — even those that make tens of millions of dollars in profit each year — have filed thousands of lawsuits against patients.
When nonprofit hospitals receive substantial public subsidies through tax exemptions, taxpayers deserve those subsidies to be translated into real benefits for patients, not just profits for the entities. That means lower prices, accessible care, meaningful charity care and transparent billing practices.
Congress has already taken steps in the right direction by establishing hospital price transparency requirements. These rules were designed to give patients, employers and insurers clearer information about the actual costs of medical services.
Unfortunately, compliance has been inconsistent.
Strengthening enforcement of price transparency rules would allow patients to better understand their health care costs and help employers and insurers negotiate more competitive rates. Greater transparency also makes it easier for policymakers and the public to identify pricing practices that drive up costs across the system.
Price transparency alone will not solve every problem in health care, but it is a critical step toward restoring accountability.
As the health subcommittee prepares for its Wednesday hearing, lawmakers should keep a simple principle in mind: Patients deserve to know the price of care before they receive it.
Hospitals play an essential role in our health care system and in the communities they serve. Ensuring transparency and accountability in hospital pricing will help preserve that mission while protecting patients and taxpayers from unnecessary financial harm.
This hearing is an opportunity to move the conversation forward and to ensure that the health care system works better for the people it is meant to serve.
• Randy Hultgren is a former U.S. House member representing Illinois’ 14th Congressional District.
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