COMMENTARY: The answer to rising health-care costs

Healthcare affordability is one of voters’ top economic concerns heading into 2027. After sweeping election wins, progressive Democrats are renewing calls for Medicare for All, a proposal that would put the federal government in charge of financing virtually every American’s health care.

But there is a fundamental problem with the Medicare for All proposal: The federal government is already doing a poor job managing the healthcare programs it oversees, allowing billions of dollars in waste, fraud and abuse to plague its programs every year. Why should Americans entrust it with even greater control?

Instead, lawmakers should pursue market-based reforms that force healthcare providers to compete on price, give patients the information and transparency they need to shop for affordable care, and empower Americans to save and pay for health care on their own terms.

A recent analysis estimates Medicare for All would increase federal spending by $47.4 trillion over a decade, the equivalent of more than six years of the entire federal budget. That number is staggering, especially when you consider the scale of the government’s failure to control spending in the programs it already manages.

Consider Medicare Advantage, the taxpayer-funded program through which private insurers provide Medicare benefits. The program is projected to receive $76 billion in excess payments in 2026 alone because of waste, fraud and abuse.

Medicare Advantage’s payment structure rewards insurers for enrolling patients with more serious medical conditions. In theory, higher payments are meant to ensure that plans have the resources necessary to care for patients. In practice, it creates a powerful financial incentive to make patients appear sicker on paper than they are in reality.

Federal investigations and lawsuits have repeatedly alleged that Medicare Advantage insurers inflated government reimbursements by adding unsupported diagnoses to patients’ medical records, making them appear sicker than they were. In January, Kaiser Permanente agreed to pay $556 million to resolve such allegations, followed by Aetna’s $117.7 million settlement in March.

MedPAC estimates higher diagnostic coding intensity will account for $22 billion in excess payments in 2026 alone. Beyond the strain on taxpayers, upcoding drives Medicare beneficiaries to pay higher premiums. MedPAC estimates that excess Medicare Advantage spending will increase Medicare Part B premiums by approximately $11 billion in 2026.

The lesson should be clear to lawmakers: Washington cannot adequately control spending in the programs it already oversees. Rather than expanding government control, lawmakers should start by eliminating the waste already draining taxpayers’ wallets.

The next Congress can start by passing the bipartisan No UPCODE Act, which would strengthen Medicare Advantage’s payment system by using two years of patient diagnostic data, excluding diagnoses from chart reviews and health risk assessments when calculating payments, and correcting for differences in diagnostic coding between Medicare Advantage and traditional Medicare.

But tackling waste is only the beginning. Lawmakers should also focus on reinstating competition and transparency.

In virtually every other part of the economy, consumers compare prices before making purchases. But in health care, insurers negotiate prices with hospitals behind closed doors, driving up healthcare spending and increasing patients’ insurance premiums. Patients frequently receive treatment without knowing what it will cost, only to discover the price when a bill arrives.

The good news is that some providers are demonstrating a better approach. For instance, at the Surgery Center of Oklahoma, Dr. Keith Smith’s patients can find publicly posted, all-inclusive prices for surgical procedures, including surgeon fees, anesthesia and facility expenses. One patient was quoted $20,000 at a local hospital for a lifesaving surgery. Instead, he flew to Oklahoma and underwent surgery for under $5,000, including travel expenses.

This model allows patients to compare costs before receiving care, while providers face pressure to compete for their business. Lawmakers should make this kind of transparency the standard, not the exception.

Lawmakers should also expand access to health savings accounts, or HSAs, which allow eligible Americans to save tax-advantaged dollars for medical expenses, putting health-care dollars directly in patients’ hands rather than leaving that to insurers and bureaucrats.

Americans are right to demand solutions to rising healthcare costs. But asking government to take on a much larger role would risk repeating the failures already evident in Medicare Advantage: billions in wasteful spending, inadequate oversight and higher costs for patients and taxpayers.

The answer to America’s health-care affordability crisis is not more government control. It is less waste, greater competition, transparent prices and more power in the hands of patients.

Charles Sauer is the president of the Market Institute and the author of “Profit Motive.” Contact at [email protected].