Small Business Week serves as an annual reminder of the important role the more than 32 million small businesses play in creating a vibrant economy. Unfortunately, both employers and employees have found themselves in a financial squeeze as healthcare costs rapidly increase while corporate hospital system profits balloon. The growing costs threaten employers’ ability to grow and employees’ ability to provide for their families. According to KFF, an employer now contributes on average $23,968 annually to an employee’s family health plan while the employee contributes $6.575. Higher premiums and higher cost-sharing have created an untenable situation that requires immediate action – one that finally reins in the abuse by corporate hospital systems.
For too long, corporate hospital systems have prioritized profits over their patients. Stories of hospitals blindsiding families with exorbitant bills, excessive markups, and hidden fees have become ubiquitous. Rising hospital prices have become the leading cause of healthcare affordability issues.
It should come as no surprise then that a growing number of families struggle to keep pace with the costs, and are forced to delay the care they need or forego it altogether. Meanwhile, the cost of providing health coverage is on pace to jump to its highest level in a decade thwarting employers ability to increase wages and invest in growing their businesses, and hospital mergers are expected to increase. As a result, policymakers have begun to take notice.
According to a new comprehensive study that looked at roughly 123 million patients, hospitals are charging substantially more for common procedures: routine ultrasounds cost more than twice as much, X-rays cost more than three times as much, and biopsies more than six times as much. All told, hospital prices have grown rapidly in recent years—on average, 27%–compared to physicians’ offices.
As hospital systems get bigger, and prices continue to increase patients and employers who bear the cost of providing coverage lose leverage. A Congressional Budget Office report found that “the prices that providers negotiate with commercial insurers are high because of several factors, including hospitals’ and physicians’ market power…”
The need for action is clear, and Americans agree: a new national poll shows that voters overwhelmingly support targeted reforms to increase transparency and accountability from hospitals. Even in this highly polarized environment, lawmakers are listening and working on solutions to protect consumers to curb excessive markups, ensure honest billing, and deliver real transparency around the fees hospitals charge.
In the Senate, Senators Maggie Hassan (D-NH) and Mike Braun (R-IN) have introduced the Site-based Invoicing and Transparency Enhancement (SITE) Act to crack down on bad hospital practices and lower costs for consumers. Bipartisan leaders of the Senate Finance Committee have committed to taking action on site-neutral reforms. And former Health and Human Service Secretaries for the Trump and Obama administrations, Alex Azar and Kathleen Sebelius, recently authored a joint op-ed that advocated for site-neutral policies, If these egregious billing practices were addressed and hospitals had to charge the same rates for services—regardless of where they were delivered—cost-sharing and premiums would be reduced by almost half a trillion dollars in the next decade.
Instead of acknowledging the pressing need for reform, the hospital industry sticks to the status quo. And it’s the job creators and their workforce who suffer because of the lack of change. Faced with a difficult financial environment, small business owners and their employees deserve a response that addresses affordability. Changing the way corporate hospitals systems operate would begin to provide much-needed relief.
Connie Partoyan is Executive Director of Better Solutions for Healthcare. Shawn Gremminger is President & CEO of the National Alliance of Healthcare Purchaser Coalitions
