Hospital pricing power has become one of the most significant drivers of healthcare affordability. As hospital prices rise, employers and families feel the impact directly through higher premiums and out-of-pocket costs.
Hospital care represents the largest share of healthcare spending in the United States, accounting for roughly one-third of national health expenditures. According to KFF, hospitals also drove about 40 percent of total national healthcare spending growth between 2022 and 2024, making them the single largest contributor to rising costs.
A key factor behind this trend is consolidation. Over the past decade, healthcare systems have grown larger, with more physicians practicing within hospital-owned organizations. Research consistently shows that consolidation is associated with higher prices and increased overall spending. As care shifts into hospital-owned settings, employers often pay more for the same services simply because of where that care is delivered.
For employers, these pressures are most visible at renewal. The majority of premium dollars go directly toward medical claims, and hospital prices play an outsized role in determining those costs. Recent projections estimate the annual cost of employer-sponsored coverage for a family of four at more than $35,000. When hospital prices rise, health plans have little choice but to raise premiums, forcing employers to make difficult tradeoffs between investing in wages, hiring, and benefits.
Making healthcare more affordable requires confronting the cost impacts of consolidation and hospital pricing power while maintaining access to high-quality care.
How Premera is responding:
Premera is working to protect affordability while ensuring access to high-quality healthcare for all the members we serve. Our approach includes:
- Advancing payment models that reward value, coordination, and outcomes
- Helping members understand and choose clinically appropriate, high-quality, lower cost care settings
- Advocating for public policies that strengthen market accountability
