Phil Kerpen, president of American Commitment, discussed the rising costs of healthcare and the impact of market consolidation in a recent episode of the Health Policy Podcast, according to a June 21 episode. Kerpen spoke with host Brian Hyde about how hospital systems, insurance companies, and government policies affect healthcare pricing and accessibility.
Kerpen said that public sentiment often blames insurance companies and Congress for high healthcare costs while hospitals receive less criticism despite their significant role in price increases. "People don't blame hospitals," Kerpen said. "They still have very high public approval ratings, which I think are largely undeserved." He attributed these ratings to extensive brand advertising and positive personal experiences.
He explained that many large hospital systems are organized as nonprofits, allowing them to acquire independent physician groups and rebrand them as hospital outpatient facilities. This enables hospitals to charge higher facility fees. "Most of the large hospital systems are organized as nonprofits," he said. "They have a huge tax advantage in doing that." Kerpen also noted that about 60% of physicians now work for hospitals, insurance companies, or private equity firms due to this consolidation trend.
Kerpen highlighted the influence of lobbying in healthcare policy-making: "Healthcare lobbyists spend about six times what defense industry lobbyists spend right now at the federal level," he said. He pointed out that this spending can hinder legislative efforts against hospital interests because hospitals are major employers in many areas.
Tracing historical context, Kerpen cited the establishment of Medicare and Medicaid in the 1960s and World War II-era tax policies as key drivers insulating healthcare from normal market pressures. He argued these policies contributed to rising costs and increased consolidation over time.
To address these issues, Kerpen advocated for reforms such as repealing restrictive regulations like state certificate of need laws, increasing competition by expanding provider supply, improving price transparency for consumers, reforming payment policies including cash pay parity for patients who negotiate lower prices, and allowing patients more control over their healthcare dollars. "We need people to control their own healthcare dollars. We want choice and competition," he said.
