The Honorable Morgan Griffith
Chairman
Energy and Commerce Subcommittee on Health
Washington, DC 20515
The Honorable Diana DeGette
Ranking Member
Energy and Commerce Subcommittee on Health
Washington, DC 20515
Dear Chairman Griffith, Ranking Member DeGette, and Members of the Subcommittee,
National Taxpayers Union, the nation’s oldest taxpayer advocacy organization, commends the Health Subcommittee for examining the role hospitals play in driving up health care spending. We urge the Subcommittee to focus on how government incentives, particularly reimbursement practices in Medicare, make hospital prices higher than they need to be.
Between 2022 and 2024, spending on hospital care alone amounted to $277 billion, representing 40% of the overall growth in national health expenditures. This increase outpaced every other source of medical spending, including physician services and prescription drugs. According to the Centers for Medicare and Medicaid Services, in 2024, hospital prices rose at their sharpest rate since 2007.
Hospital markets suffer from a stunning lack of competition. Nearly half of all metropolitan areas across the country had just one or two hospital systems controlling the market for inpatient care in 2022. By 2024, nearly 80% of all doctors across the country were employed by hospitals or other corporate entities.
According to data from the Department of Health and Human Services, hospital-to-hospital mergers in concentrated markets can raise prices anywhere from 6% to 65%. Even when hospitals acquire smaller independent physician practices, prices for identical medical services from those doctors rise on average by 14%.
Medicare reimbursement policies that pay hospitals more for the same medical service simply because they are delivered in a hospital-owned facility are a key driver of provider consolidation. A study found that, in 2021, the average Medicare reimbursement for drug administration services was 129% to 211% higher in hospitals than in independent doctors’ offices.
We urge the Subcommittee to make the enactment of site-neutral payments in Medicare a key priority. Equalizing Medicare reimbursements would remove the financial incentives that encourage provider consolidation and inject much needed competition into hospital markets.
Sincerely,
Alexander Ciccone
Policy and Government Affairs Manager
National Taxpayers Union