OPINION
For years, the national conversation around healthcare costs and inflation has focused almost exclusively on insurance companies.
Yet that narrative obscures the deeper reality: the most significant pressures on American heathcare costs today are driven by hospital systems and pharmaceutical pricing power — not insurers.
Unless federal leadership confronts these structural issues, employers and working families will continue absorbing the financial consequences.
The Core of the Problem: Hospitals, Pharma, and a Misaligned Federal Focus
Healthcare premiums are rising at the fastest rate in more than a decade.
Employer and employee plan costs have jumped 6-7% annually during the last two years, and much of that increase can be traced to two accelerating trends: aggressive hospital contract demands, escalating pharmaceutical markups, and medical bill codes.
Across the country, large hospital systems are seeking contract renewals with reimbursement increases that have ranged in some cases from 30% to 60%.
In several recent negotiations — including examples in Broward County, Florida, and Baltimore, Maryland — hospitals insisted on increases at the top end of that range.
When insurers refuse, hospitals often threaten to leave the network, triggering widespread anxiety and panic among patients suddenly warned that their doctors or local facilities may no longer be covered.
Hospitals frequently justify these demands by citing anticipated shortfalls in Medicare, Medicaid, or uncompensated care for uninsured and undocumented patients.
Many of these institutions also receive federal subsidies to support these populations, yet the premium burden continues to shift to the private market with little meaningful parallel internal cost restructuring.
Executive compensation, administrative expansion, and systemic inefficiencies remain largely untouched.
The result is a cost-shifting strategy that places the burden on private employers and working families.
Meanwhile, federal policy efforts tend to concentrate on creating specialized protections or individual plan protections for select groups rather than addressing the structural cost drivers inflating the entire system and thus affecting every American.
If policymakers focused on the broader ecosystem — hospital pricing and contracts, pharmaceutical markups, and billing integrity — many of today’s affordability debates would be dramatically different.
A similar pattern is unfolding in the pharmaceutical sector.
Pharmacy benefit managers (PBMs) and drug manufacturers continue to push list prices and dispensing fees higher, forcing insurers to absorb the increases.
Those elevated costs then flow directly into premiums, co-pays, and out-of-pocket costs.
The Outcome Is Predictable:
—Employers can no longer sustain the rising cost of group health plans.
—Workers struggle to afford coverage, due to soaring deductibles and premiums.
—Insurers are blamed for price increases that they cannot fully control.
An Unsustainable System
The United States now operates a healthcare ecosystem where hospitals and pharmaceutical companies — including many benefiting from federal research dollars or public subsidies — raise prices at rates far exceeding inflation while delivering less affordability.
Institutions that once functioned as community-driven nonprofits have, in many cases, become investor-owned for-profit entities whose financial priorities (or obligations to shareholders) overshadow and supersede their obligation to serve patients.
If these unchecked practices continue, the U.S. will face:
—A steep rise in employers dropping coverage entirely.
—More workers pushed into high-deductible or no-coverage plans.
—A deepening divide in access to healthcare, even among middle-income families.
Most deductibles today range from $5,000 to $10,000, an unmanageable cost for many Americans — and that is before facing hospital stays or specialist treatment.
Today’s typical deductibles — $5,000 to $10,000 — are simply beyond reach for many households. And coding incentives within large systems can compound the problem.
In one case, a patient treated for kidney stones was coded as having “acute kidney failure,” a substantially more expensive diagnosis.
These upcoding patterns increase systemwide costs and, ultimately, everyone’s premiums.
The Best Path Forward: Federal Oversight, Contract Controls, and Policy Reform
The solution is not another expansive government program.
What the nation needs is targeted accountability — and firm federal oversight capable of restoring balance to the healthcare marketplace, especially focused on the pricing practices that are inflating premiums at every level of the system.
Just as recent federal actions have improved transparency in college tuition and international drug pricing, similar reforms must be applied to domestic healthcare pricing practices.
Key Policy Solutions Should Include:
- Capping annual hospital contract increases, to prevent excessive rate demands that ripple directly into premiums, which are ultimately passed on to employers and families.
- Mandating full transparency for PBM and drug pricing structures, incuding publicly available rate sheets and markup disclosures to reveal where unjustified markups occur.
- Requiring accountability for for-profit hospitals receiving federal support, ensuring taxpayer dollars correlate with operational responsibility and patient affordability.
- Modernizing HSA rules by raising the contribution age beyond 65 for working Americans and doubling contribution limits for both independent and dependent family members. With deductibles climbing year after year, families need tax-advantaged savings tools that match real-world medical expenses. Updating HSA eligibility and contribution caps would allow households to better manage rising out-of-pocket costs and maintain financial stability in the face of growing healthcare burdens.
For 2026, the IRS has set the following maximum contribution limits for Health Savings Accounts (HSAs): US $4,400 for individuals, US $8,750 for families, and US $1,000 catch-up contribution for individuals 55 or over—levels that fall far short of what most families now face in annual deductibles and medical spending. These thresholds should be at least doubled to reflect modern healthcare costs and give working Americans a realistic ability to prepare for care.
Without these reforms, employers and families will remain the default financial safety net for a system that has grown increasingly disconnected from affordability and practical care delivery and will continue to serve as the unwitting backstop of a hospital- and pharma-driven profit model.
The Bottom Line
America’s healthcare system cannot function sustainably or even remain viable when hospitals, PBMs, and drug manufacturers wield unchecked pricing power.
True reform does not require more bureaucracy — it requires transparency, accountability, and fair oversight across every link in the healthcare supply chain.
Only then can premiums stabilize, employers regain footing, and families finally experience the affordability they have long been promised.
Healthcare should be about healing people — not protecting profit margins. Hospitals, drug companies, and insurers all have a role to play, but when one part of the system breaks down, everyone pays. The government must act now to implement guardrails before healthcare costs crush the American people.
(Hospitals raise their contracts. Insurers raise their premiums. Employers and the American people pay the price. Illustration courtesy of Richard S. and Juju Bernstein)
Richard S. Bernstein is CEO, and Juju Bernstein is director of business development, at Richard S. Bernstein and Associates in Palm Beach Gardens, Florida. A firm specialzing in advanced estate planning, insurance, and retirement planning.