{"id":638458,"date":"2026-05-12T11:51:24","date_gmt":"2026-05-12T11:51:24","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/638458\/"},"modified":"2026-05-12T11:51:24","modified_gmt":"2026-05-12T11:51:24","slug":"breaking-up-big-medicine-wont-make-health-care-cheaper","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/638458\/","title":{"rendered":"Breaking Up Big Medicine Won\u2019t Make Health Care Cheaper"},"content":{"rendered":"

Americans are desperate for relief from rising health insurance premiums. Average annual premiums for single-coverage plans have risen from $7,491 in 2020 to $9,325 in 2025<\/a>. For family plans, the cost increase was steeper, from $21,419 to $26,993 over the same period.<\/p>\n

Massachusetts Senator Elizabeth Warren blames<\/a> these rising prices on \u201cmassive health care companies,\u201d which created \u201clayers of complexity to jack up the price of everything from prescription drugs to a visit to the doctor.\u201d She argues that the \u201conly way to make health care more affordable is to break up these health care conglomerates.\u201d<\/p>\n

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Teaming up with Missouri Senator Josh Hawley, Warren has introduced the Break Up Big Medicine Act<\/a> to stop large insurers from steering enrollees to medical providers they own.<\/p>\n

Health-care consolidation may make for a politically convenient scapegoat, but blaming it for rising costs misdiagnoses the problem. America\u2019s largest insurers directly employ only a tiny fraction of the nation\u2019s medical professionals. Hospitals are responsible for the bulk of consolidation that has occurred, though the country\u2019s most expensive hospitals tend to be in its most competitive markets.<\/p>\n

Health insurers may not be popular<\/a>, but they do not \u201cown or control every part of the health care supply chain,\u201d as Senator Warren\u2019s press release<\/a> on the bill claims. UnitedHealthcare\u2019s 90,000 physicians<\/a> account for only 5 percent of the 1.7 million<\/a> medical professionals it reimburses for care. Cigna and Aetna rely almost exclusively on independent medical providers. Overall, only 1 percent to 2 percent<\/a> of physicians work directly for insurers.<\/p>\n

Insurers bear an increasing share of the cost of prescription drugs, thus reducing the portion borne by patients. From 1990 to 2022, the share of prescription spending paid out of pocket dropped from 57 percent to 14 percent<\/a>. For insurers, integrating prescription drug coverage with insurance for other medical services is common sense, allowing them to improve medication adherence<\/a> and thus avoid more costly hospitalizations.<\/p>\n

Most economists believe that hospital-centric integration is more problematic as a cost driver, but Warren\u2019s bill ignores it entirely. The decline in the share of physicians<\/a> in private practice from 60 percent in 2012 to 42 percent in 2024 was largely driven by increased employment by hospitals. Physician-hospital integration can improve the coordination of care, but it has pushed up costs for physician services<\/a>, outpatient procedures<\/a>, and childbirths<\/a>.<\/p>\n

We\u2019ve also seen a wave of hospital mergers. To some extent, mergers eliminate duplicative overhead costs, but they also strengthen the pricing power of facilities in negotiations with insurers. As these mergers were typically piecemeal acquisitions of single hospitals rather than the combination of giant hospital systems, they failed to command the attention and resources of antitrust enforcers. From 2002 to 2020, the Federal Trade Commission challenged only 13 of 1,000<\/a> hospital mergers.<\/p>\n

Yet, the overall impact of hospital mergers has been modest. The most rigorous analysis<\/a> of the phenomenon concluded that only mergers between nearby competitors significantly increased prices, and that prices set by local hospital monopolies were only 12 percent higher than those in markets with four or more nearby competitors.<\/p>\n

In fact, hospital competition can often push up costs<\/a>, as facilities vie to attract well-insured patients by hiring the best physicians<\/a>, newest equipment<\/a>, and most luxurious amenities<\/a>. Patients seeking MRI scans bypassed an average of six<\/a> lower-priced providers. The 12 percent average price disparity between competitive and consolidated markets is dwarfed by differences within the most competitive markets. In 2021, equivalent hospitalizations at New York Presbyterian Hospital in 2021 cost 162 percent more<\/a> than those at Mount Sinai.<\/p>\n

Nationally, hospital markets are most competitive<\/a> in the largest metropolitan areas, which have a population capable of supporting multiple facilities close to each other. By contrast, the most concentrated hospital markets<\/a> are largely synonymous with rural areas. Rural hospitals are more expensive<\/a> because they have low patient volumes and fewer economies of scale\u2014and the paucity of nearby competitors is a consequence of this, not the cause. Nonetheless, despite the absence of local competition, rural residents still travel far from home to receive 48 percent<\/a>\u00a0of elective surgeries.<\/p>\n

In a recent hearing<\/a>, Missouri Representative Jason Smith, chair of the Ways and Means Committee, blamed \u201cconsolidation and mergers\u201d for the \u201cborderline extortionary prices hospitals charge patients.\u201d He noted the story of a Florida man who \u201chad an emergency CT scan that the hospital billed for $13,000,\u201d before \u201ca follow-up scan at a different location cost him only $79.\u201d Yet, price discrepancies like these owe more to poorly designed payment rules<\/a> for out-of-network emergency care than to monopoly pricing power. After all, the patient in Smith\u2019s example subsequently used a competitor offering a lower price.<\/p>\n

The general pricing power of hospitals is nonetheless excessive, even in the most competitive markets. Facilities bill private insurers on average 254 percent<\/a> of what Medicare pays for the same procedures. But, again, consolidation is more a symptom than the underlying cause. Hospital pricing power owes to<\/a> the price-insensitivity of broad-network, employer-sponsored plans, in which most privately insured Americans are enrolled. The appropriate remedy here is to let workers switch to narrower-network plans<\/a>, which exclude the costliest providers.<\/p>\n

Why is trust-busting so popular among politicians like Senators Warren and Hawley? Because large impersonal institutions make good villains. It\u2019s easier to repeat a familiar story about diabolical profiteers than to explain the intricacies driving high health-care costs. But, most of all, scapegoating holds out the promise of a free lunch: the idea that we could easily reduce high costs by cutting needlessly inflated profits.<\/p>\n

What\u2019s mainly responsible for the rising cost of health insurance? The growing use of increasingly sophisticated medical technologies<\/a>. Serious attempts to reduce costs would present painful trade-offs that politicians prefer to avoid.<\/p>\n

Chris Pope<\/a> is a senior fellow at the Manhattan Institute.<\/p>\n

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City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).<\/p>\n","protected":false},"excerpt":{"rendered":"Americans are desperate for relief from rising health insurance premiums. Average annual premiums for single-coverage plans have risen…\n","protected":false},"author":2,"featured_media":638459,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[97,252,253],"class_list":["post-638458","post","type-post","status-publish","format-standard","has-post-thumbnail","category-health-care","tag-health","tag-health-care","tag-healthcare"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/638458","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=638458"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/638458\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/638459"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=638458"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=638458"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=638458"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}