While Sen. Jeanne Shaheen continues to demand more tax money for expanded Affordable Care Act subsidies, she continues to dodge the key question: Why has 15 years of “affordable care” resulted in soaring healthcare costs that require ever more subsidies?
An InsideSources analysis of Centers for Medicare & Medicaid Services (CMS) data indicates that excessive billing by hospital systems remains the major driver of high healthcare costs for Americans.
According to CMS, in the years since Obamacare became law, escalating reimbursement demands submitted to insurance companies by these hospitals have been the top cost driver, outpacing even prescription drug costs.
The CMS data shows that total national health expenditures climbed to nearly $4.9 trillion in 2023 – a 7.5 percent jump, more than triple the rate of GDP growth during that same period.
President Donald Trump and politicians in both parties love to talk about drug prices and Big Pharma. Reps. Maggie Goodlander and Chris Pappas introduced the “Protect Patients From Costly Care Act” in September, which, among other things, targets “handouts to Big Pharma.”
Meanwhile, hospital spending remains the single largest slice of the nation’s healthcare bill, totaling $1.52 trillion in 2023. And that’s a 10.4 percent single-year jump from 2022, according to CMS.
December 2024 reporting from Health System Tracker indicates that, over the long term, hospitals gobbled up 30 percent of total healthcare costs.
While New Hampshire has thus far dodged the trend of big hospital systems demanding rate increases of many times the rate of inflation, that challenge has been evident nationwide.
Such demands for higher compensation appear, in some cases, to be fueled by lavish spending or financial decision-making in some systems, and by the overall problem of hospital consolidation. Both problems have manifested themselves here in the Granite State.
According to an analysis by the Granite State News Collaborative, New Hampshire has seen a “frenzy of consolidations among hospitals… in recent years.”
Yale economist Zach Cooper blames the spike in such consolidations for much of the increase in healthcare spending, noting that eliminating competition eliminates incentives to rein in costs. Since the early 2000s, there have been nearly 2,000 mergers among the approximately 5,000 hospitals nationwide, he told Yale News in 2022.
“We have really good evidence that hospital competition raises providers’ quality,” Cooper said. “We also can see that hospital mergers allow hospitals to raise their prices. So, taken together, the changes we’ve seen in the U.S. hospital sector have meant weaker incentives for hospitals to improve their clinical outcomes and their prices.”
But hospitals having more bargaining power in a consolidated environment isn’t the only problem. Questionable financial decision-making at some New Hampshire health systems could fuel demands for higher reimbursement rates, with insurers being seen as easy marks.
A review of the 2021, 2022 and 2023 tax filings of three major nonprofit systems in New Hampshire—Capital Region Health Care (which runs Concord Hospital), Dartmouth Health, and Solution Health—reveal high CEO compensation.
While the 2023 national average was just over $1 million, Capital’s Robert Steigmeyer and Dartmouth’s Joanne Conroy collected around $1.7 million. Solution Health’s Brad Kreick collected approximately $1.4 million.
In tax years 2022 and 2023 (the most recent years reviewed), Dartmouth Health also offered discretionary spending accounts for executives. And in 2021, it covered executive “health or social club dues or initiation fees.” Solution Health, meanwhile, offered housing allowances for executives for at least two of the years for which filings were reviewed.
Dartmouth Health has also spent heavily on advice from high-cost, international “white shoe” law firms like Mayer Brown LLP, shelling out more than $3 million, including nearly $700,000 in 2023 alone.
And while Solution Health’s tax forms do not indicate that lawyers were among its top five highest-paid contractors, a class action lawsuit filed against the system in July 2024 could mean even higher legal costs that will ultimately be covered through demands for higher reimbursement rates from insurers – and its customers.
Rick Pollack, president of the American Hospital Association, has acknowledged that “increased expenses, workforce challenges, and growing administrative burden are unsustainable and creating headwinds and obstacles that threaten access to care for millions of Americans.” In 2021, Solution Health committed to a minimum wage of $17 an hour across its entire system.
Analysts attribute the surge to higher utilization, increased patient acuity, and ongoing post-pandemic recoveries in care volumes, including more outpatient services and complex treatments. This rapid acceleration followed unusually slow hospital spending in 2022, when growth was just 3.2 percent, according to Fierce Healthcare.
However, the U.S. is now several years past the pandemic, and the situation does not appear to be improving. The nation continues to plow huge sums of money into healthcare, with the sector remaining a major force in the economy, accounting for nearly 18 percent of GDP in 2023.
Policymakers face pressure to address affordability without sacrificing access or quality of care. One solution presented by New Hampshire Sen. Maggie Hassan is site-neutral billing and increased hospital price transparency, but thus far, Hassan’s specific proposals have failed to make it into any bipartisan healthcare deal in Congress.
Health economists offer a simple path forward: less hospital consolidation, more competition, and tougher oversight of pricing power. Until hospitals and drugmakers face real constraints on what they can charge, they argue, the forces driving health care costs higher will continue to do just that.
By enforcing antitrust laws, strengthening price transparency rules, and leveraging the purchasing power of public programs to put downward pressure on prices, the ability of these entities to drive up healthcare costs will be significantly reined in.
Without these steps, economists warn that efforts to control healthcare spending will continue to fall short, even as patients, employers, and taxpayers pay more each year.
Jessica Towhey of InsideSources.com contributed to this story.