Where Congress can achieve meaningful healthcare reform

Following the longest government shutdown in history, Congress ended 2025 without extending COVID-era enhanced subsidies in the individual market. Yet the real crisis remains: America's healthcare system is still on life support. 

The partisan brawl over subsidies is just the latest skirmish. Democrats warned of crushing cost hikes for millions if subsidies lapse; Republicans insisted the aid was never meant to be permanent. Both points are true. Yet they miss the larger reality: U.S. medical care is fundamentally unaffordable, its prices relentlessly inflated by multiple players across the healthcare industry. 

Drug makers, pharmacy benefit managers and insurers are all complicit in high and rising costs. But we cannot ignore the elephant in the room. Today, 50 cents of every dollar employers spend on healthcare goes to hospitals and health systems.

A family of four has an average cost of $25,600 for employer-sponsored health insurance each year, with families paying $6,300 directly out of pocket. That's about 10% of the average American's salary today. For lower-income families, the ratio of wages-to-healthcare costs is even worse. 

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Many benefit advisers must uncomfortably explain the double-digit increases that their employer clients are facing year after year, a compounding interest with ripple effects across every other part of our economy. Sooner rather than later, the individual market, whose beneficiaries experience the steepest premium increases, will simply fail because large hospitals and health systems will have priced themselves out of reach. When the individual market fails, the small group market will not be far behind. In Michigan, three insurers exited the market last year alone, shrinking choice and driving costs even higher.

To make up for any lost revenue or cost increases of their own, health systems will press the only button they know: raising prices on larger, self-funded employers. This steep increase — following decades of unchecked hikes — may finally break the camel's back that is employer-sponsored insurance. This year we are projecting the largest healthcare inflation in the commercial market over the past 15 years. As our recent survey of employers found, nine in 10 of them expect rising healthcare costs will threaten their ability to compete and 92% believe higher costs will force even more cost-shifting to employees.

Individuals, employers, purchasers and taxpayers are at a breaking point — and we can see the cracks growing today. The government reopened and Congress is moving onto other business, but if lawmakers want to do anything more than delay the inevitable, they must confront the real drivers of healthcare costs for the more than 150 million Americans covered through employer-sponsored insurance. 

Congress has a real opportunity to take affordability seriously. It can pass legislation to mandate meaningful, enforceable price transparency for hospitals and health plans. It can mandate "site neutral" payments, so taxpayers and employers don't pay more for hospital outpatient care than they'd pay for the same care in a doctor's office. 

Congress also can ban anti-competitive contracting between hospitals and health plans. And it can reform the 340B program to ensure it is actually serving low-income patients and underserved communities, rather than increasing costs for working families.

More than anything, Congress must focus on where the real problem lies in healthcare. To quote the late Princeton economist and healthcare researcher, Uwe Reinhardt: "It's the prices, stupid."