Brian Blaise, president of the Paragon Health Institute, argues that government policies, not market dynamics, drive U.S. hospital costs, which have tripled inflation rates since 2000. He cites certificate of need laws, ACA reimbursement limits, and the exploited 340B drug program as key factors enabling inefficiency and consolidation among the 68 million Medicare and 82 million Medicaid enrollees. Blaise agrees with President Trump that limited resources require sustainable trajectories for these programs to curb deficits and inflation, concluding with a transition to live updates on Baton Rouge shootings and a quote on unity. [Automatically generated summary]
Today on C-SPAN's Ceasefire, a bipartisan conversation on the Iran conflict with Maryland Democratic Congressman Stenny Hoyer and Nevada Republican Congressman Mark Amade.
Joined by our host Dasha Burns, they'll also discuss Congress asserting its war authority and how the conflict and rising gas prices could impact the midterm elections.
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This weekend, the annual White House Correspondence Dinner is being held in Washington, D.C., a decades-long tradition that brings together journalists, politicians, and celebrities for one night to celebrate the First Amendment and recognize the work of the White House Press Corps.
This year's entertainer is mentalist Oz Perlman, and President Trump is also expected to attend for the first time as president.
Our live coverage begins at 7 p.m. Eastern with the red carpet arrivals.
You can watch on C-SPAN, C-SPAN now, our free mobile video app, or online at c-span.org.
Here in the Washington Journal this morning, we want to turn our attention to healthcare.
Joining us this morning is Brian Blaise.
He's the president of the Paragon Health Institute and a former White House economic policy advisor in the Trump administration.
Brian Blaise, I want to start with the report from your group, the Hospital Cost Crisis.
And in the report, you write hospitals are the largest cost drivers in the U.S. healthcare system, accounting for about one-third of total expenditures.
Government payments into the system are a primary driver of the nation's worsening fiscal outlook.
Given these realities, it is imperative that policymakers understand the role of modern hospitals, the development of giant health systems, and the incentives driving their business decisions.
Unfortunately, hospital care in the United States does not reflect a well-functioning, dynamic market that provides efficient, cost-effective care.
It is marked by opacity, complexity, and distorted prices.
Do you blame this situation on government-run programs like Medicare and Medicaid?
Hey, Greta, it is great to be on with you this morning.
And thank you for highlighting our new and very important new paper.
Hospital prices have risen faster than any other economic sector.
Since the turn of the century, they've increased three times faster than inflation and more than twice as fast as worker wages.
Family budgets are increasingly strained under high health insurance premiums, and worker wages are much, increases are much lower than they would otherwise be because of health insurance premium increases.
And hospital prices and costs are the primary driver.
What we looked at in the report are the numerous federal and state policies that protect hospitals from competition, that lead to excessive consolidation in the market, and consolidation leads to higher prices and actually worse quality of care, and that subsidize inefficiency.
You know, government payment programs have historically paid hospitals based on costs and cost-based reimbursement.
And if you reimburse based on costs, what you are going to get is higher costs and administrative bloat.
So we do have a hospital cost crisis.
It is driven primarily by policy failure.
And it's important for policymakers to have the correct diagnosis because there's going to have to be policy changes that bring down hospital prices and that improve overall health care affordability.
What government programs are you referring to?
So we can sort of separate out into a few categories.
There are policies that protect hospitals from competition.
One of them is a state-level policy.
It's called a certificate of need law.
What these do is basically give hospitals veto power over competition.
So in order for new supply to come into the market, you need to apply to a state board, the certificate of need board, and that board is often controlled by the incumbent hospital providers.
So that gives them a veto power over new competition.
There are a policy in the Affordable Care Act, limited Medicare reimbursement for physician-down hospitals.
Physician-downed hospitals were increasing in the market prior to the enactment of the Affordable Care Act, and their growth has completely stagnated.
Again, it was the traditional hospital systems that argued for that inclusion in the ACA and protecting them from competition.
There are government payment policies through Medicare and Medicaid that have incentivized higher costs and consolidation.
The Medicare and Medicaid program will both pay more for identical services provided in a hospital than in an independent physician office, like much more, two to three times.
What that does is lead to incentives for consolidation.
So hospitals have acquired physician offices, and when they do, they then bill for the exact same service, but at a much higher rate.
And the Medicaid program has distortions as well.
There is Medicaid program is a joint federal state program.
States are spending mostly with federal dollars.
Hospital systems and states have colluded on financing gimmicks that enable the hospital systems within the states to get much more federal money and where you've got hospital systems that are now making large profits off of the Medicaid welfare program.
And we detail a whole bunch more in the report.
But in totality, what those government protections from competition and subsidies for inefficiency have done is led to consolidation.
So many parts of the country, there's only one or two hospital systems.
When you have that much consolidation in the market, that leads to much higher prices for commercial payers.
So people that have employer-sponsored insurance are paying much higher premiums because of the bad government policies that have led to so much distortion and so much consolidation in the market.
Why is it leading to consolidation?
Why is there an incentive to try to consolidate?
So the hospital, if they acquire the physician office, are then able to bill at a much higher rate.
So it actually leads to incentives with hospitals and with physicians for the hospital to acquire the physician practice.
The physician will get a cut of the higher rate that the hospital is able to secure.
So there are direct financial incentives.
Hospitals that the payments increase for the same service delivered in a hospital than in a physician office.
There's also this program, the 340B drug program that has also led to consolidation.
What the 340B drug program does is it was meant to be a small program for safety net providers to allow them to access drugs at a discount and then sell them at a much higher rate, netting the difference.
It was a way for safety net providers to be able to provide care to lower-income Americans to be able to gain some extra revenue in order to do that.
But what we've seen is that big hospital systems have acquired these smaller covered entities, and the 340B program has exploded, and it's another major factor with consolidation.
According to the Centers for Medicare and Medicaid Services, 68 million people currently are enrolled in Medicare Part A, which covers hospital stays.
82 million Americans covered by Medicaid and the Children's Health Insurance Program known as CHIP.
1.5 million births paid for by Medicaid and CHIP each year.
Recently, this is the NBC news headline: President Trump says it's not possible for the U.S. to pay for Medicaid and Medicare and daycare.
Do you agree, Brian Blaise, with the president's remarks on Medicare and Medicaid?
Well, I mean, the federal government is paying an enormous amount for Medicare and Medicaid.
If you look at the federal budget, and the federal budget has grown significantly, it grew significantly during the Biden administration, during the COVID pandemic.
The Medicaid program in particular just exploded with extra enrollment from the pandemic, improper enrollment, and then a lot of this corporate welfare, these financing schemes that Paragon, we've written a lot about them.
I mean, I think what the president is saying is that resources are ultimately limited.
The government can't do anything.
It can't do everything.
And what we need is these programs to be put on a sustainable trajectory.
They are the primary driver of rising federal spending and putting significant pressure on interest rates and inflation because of how large the deficits are.
So I think it is really important that we get Medicare and Medicaid both put on sustainable trajectories so that they can serve the patients who truly need them.
And I think one of the things that we're seeing from CMS is this war on fraud.
There is tremendous waste, fraud, and abuse in government health care programs.
And this is money that doesn't go into patient care.
It's just lost.
And that is, I think, the administration targeting waste fraud and abuse.
I really applaud that and the moves of Dr. Oz and the broader administration to protect these programs for Americans who are eligible for them and who most need them.
We're talking about health care costs and the role hospitals play in it.
Our guest is Brian Blaise.
War on Fraud in Health Care00:00:29
And we take you live now to an update on the shootings at the Mall of Louisiana in Baton Rouge with Louisiana Governor Jeff Landry and law enforcement officials.
That was the scripture 17-year-old Martha Odom shared on social media just days ago, shortly before she lost her life in yesterday's shooting at the Mall of Louisiana.
Let me repeat that one more time: how good and pleasant it is when God's people live together in unity.