Addressing Affordability Starts with Hospital Prices

By: Mina Chitti | Tuesday, April 14, 2026

Part of TAHP's Affordability Series: What's Driving Up the Cost of Coverage

What's new: Health care costs are now Americans' number one concern. Hospital prices are a major reason why. Hospital spending drove 40% of health care spending growth from 2022 to 2024.

Keep it simple: When hospitals charge more, premiums rise. That happens in several ways:

• Higher negotiated prices after hospital consolidation.
• More aggressive billing and upcoding.
• Added facility fees when hospitals buy physician practices.
• Large markups on clinician-administered drugs and 340b drugs.

Why it matters: Texans are not paying more because they are getting more care. They are paying higher prices. When hospitals consolidate and buy up doctors' offices, they charge more for the same care. Those higher prices show up as higher premiums and higher out-of-pocket costs for Texas employers and families.

The price problem:

• Nearly 90% of premium increases employers face in 2026 trace back to rising health care prices. Hospital prices are the biggest piece.
• 80% of the gap between what the U.S. spends on health care compared with other wealthy countries comes from hospital prices.
• Hospital prices grew faster in 2024 than at any point in nearly 20 years. Employer health plans now pay hospitals 254% of what Medicare pays for the same care.

Texas has a competition problem:

• Over 60% of Texans live in hospital markets rated "highly concentrated," the worst ratio among large peer states. In 95% of Texas metros, just one or two systems control the entire market.
• Consolidation drives prices 15% to 30% higher than in competitive markets. In Houston, where three hospital systems hold over 70% of the market, one large insurer saw hospital prices jump 19% between 2020 and 2024. In less consolidated cities, the same insurer saw increases of just 4% to 7%.
• Hospitals are buying up doctors' practices and charging more for the same care in a more expensive setting. Physician prices rise an average of 15.1% within two years of a hospital acquisition, with no improvement in quality. For the same service, hospital outpatient prices run up to 13.5 times higher than a physician's office.
• Hospitals mark up drugs too: Hospitals charge 6.59 times more than independent physician practices for life saving infusion drugs.
• Billing is getting more aggressive: Some hospitals have increased upcoding by 28% over the past three years, billing at higher intensity without delivering higher-intensity care.

Solutions to Lower Health Care Prices in Texas:

1. Fight back against out-of-control prices: Ban anti-competitive health care contract terms, stop inappropriate facility fees, and give patients complete price and billing transparency.
2. Stop hiding cash prices from insured patients: State and federal law require providers to post cash prices, yet some still refuse to share or accept the cash price for insured patients. Texas should end this and ensure every patient, with or without insurance, can access a cash price.
3. Require guaranteed upfront pricing: Patients cannot make informed decisions without knowing the cost of care. Texas should require all providers to deliver a guaranteed upfront price estimate that will not change in the final bill.
4. Allow innovative, affordable networks: Texas mandates force employers into expensive, oversized networks. Texas should allow flexible network designs that promote competition and deliver lower prices.
5. Reward patients for shopping smart: Give health plans additional flexibility to create innovative new coverage that rewards families for seeking the best value in care.

The bottom line: Hospital prices are the single largest driver of health care costs in Texas and across the country. Competition works. Where it exists, prices stay in check. Where it doesn't, employers and families pay more for the same care. Texas should protect patients by restoring competition and giving them the pricing information they need before they walk through the door.

Keep up with TAHP's health care affordability series:

• April 7th: Health care fraud is wasting billions.
• April 2nd: The No Surprises Act is protecting patients, but private equity is creating a new affordability crisis.
• March 30th: Hospitals are using AI to charge more.
• Series Opener: Why is health insurance getting more expensive?