Affordability in health care reaching ‘tipping point’

As health care continues to get more expensive, there’s growing attention on the return on the investment.

A recent report from Trilliant Health raises more questions on the value of the enormous sums going into health care. More than $4.9 trillion is being spent on health care, and the results aren’t meeting expectations. Health expenditures are forecast to reach 20% of GDP by 2033, equivalent to $24,200 per person, according to the report.

Allison Oakes, chief research officer for Trilliant Health, talked with Chief Healthcare Executive® about the growing unrest over health care spending, rising costs, and why some Americans end up paying far more for care than others, even in the same market.

“it's pretty clear that we aren't getting enough value out of the system,” Oakes says.

“It feels like we're at a tipping point,” she says. “It feels like there are enough factors in play that something's got to give and something's got to change. And the question is, is it going to be market discipline, and are we going to sort of reform our system from within?”

Consistent variation

With more transparency in health plan prices, it’s becoming clear that prices can vary widely, and not just from state to state. Even among hospitals in the same city or region, some patients pay thousands of dollars more for similar services, or even tens of thousands of dollars.

The report found commercially negotiated rates for some conditions varying 8.5 times. In one case, rates for a coronary bypass ranged from $39,579 to $334,147.

“The one thing that's consistent is, no matter how you cut it, you're going to see variation,” Oakes says. “So even when you get down to the same market, hospitals operating in the same market, or even the same hospital and two different payers, you'll see this variation in negotiated rates.”

“We think we need to do something to address this issue,” she says.

Read more: After the pandemic, patients have changed the way they get care

Employers must pay attention

Employers have been facing higher costs for health care, which they have often passed onto their workers, Oakes says.

“This is certainly top of mind going into 2026,” she says.

Companies have operated under the idea that if workers have more skin in the game, they may be more efficient in their use of health care. But as Oakes says, that hasn’t necessarily been the case.

But with more information available on pricing practices, employers have the chance to put more pressure on health plans, she says.

“We hope that's the thing that's going to start making a difference,” she says. “And it's also something that employers have to pay attention to. They have this fiduciary duty to be providing their employees with high value benefits. So now that this information is available, whether it's their benefit brokers or whoever else that they work with, they need to start leveraging this information to make sure they're delivering on that promise.”

Read more: Hospitals likely to face more financial pressures in 2026

Price and quality

Hospitals charging higher prices aren’t necessarily delivering better services, according to the report.

The report cites a median negotiated rate for treating a form of pneumonia in Miami of $22,255, and noted the provider getting the highest rate among 15 hospitals also had the sixth highest mortality.

Hospitals can charge more, even for similar services in the same market, partly to support a wider variety of services that they offer. But Oakes says the variance in prices raises many questions.

“These are things that just don't make sense and are ultimately impossible to explain away,” Oakes says.

For every dollar spent on direct patient care in 2023, hospitals spent nearly two dollars on administrative and operational costs, the report found. Oakes points out that the rising administrative costs are outpacing the costs of direct patient care.

“We know we have a really complex system, and it's part of the problem when it comes to understanding what we put into the system and what we get out of it,” Oakes says. “There just seems to be a lot of inefficient use going on.”

“We have to sort of assess what we're doing and wonder what we could be doing differently,” she says. “And I think the ratio of administrative and operational spend to direct patient care is a big red flag that we need to dig into further and sort of figure out how we could be doing things differently.”

Government pressure

Oakes suggests that hospitals and health plans may see greater actions from federal and state governments to control healthcare spending.

Indiana recently passed a state law that sets caps on prices, and Oakes says that’s a law that may get more attention from other states.

Hospitals in Indiana could face financial penalties, and even the potential loss of tax-exempt status, if those prices surpass levels set by the state, according to the Healthcare Financial Management Association. The law takes effect in 2026.

“We think that that is potentially a signal of what might happen in other states and could eventually happen at the federal level, too,” Oakes says. “So it's something we're tracking really closely.”

However, Oakes says government-based interventions, even if well-intended, may not be the most effective.

“Unfortunately, most government interventions to date haven't contained healthcare spending,” Oakes says.