Ezekiel J. Emanuel is a physician and vice provost for global initiatives at the University of Pennsylvania. Brian Blase is the president of Paragon Health Institute.
The two of us stand on opposite sides of the political divide — one a liberal, the other a conservative. We served in senior White House health policy roles for separate administrations. We disagree about the Affordable Care Act and other issues. But we agree on many of the biggest problems facing U.S. health care — and on many solutions, too.
The challenges in the health care industry are myriad. Americans now spend over $1.6 trillion annually on hospital costs — nearly a third of total health care spending. Since 2000, hospital prices have more than tripled, rising nearly twice as fast as general health care prices and three times as fast as inflation. Hospital consolidation has reduced competition.
Navigating care and coverage can be extraordinarily complex, and the employers covering roughly 160 million Americans often do a poor job getting good deals. Without fixed budgets, Medicare and Medicaid encourage states, insurers and providers to maximize federal payments regardless of service quality and health outcomes. Annual insurance churn gives insurers less reason to invest in the long-term health of their customers when the savings may not materialize for years.
But there are several opportunities for lawmakers on both sides to address these issues and provide Americans with better health care at lower costs:
Reforming payment policy and encouraging competition would help bring down high hospital prices. Medicare and private insurers pay much more for services performed in a hospital outpatient department than in a doctor’s office, ambulatory surgery center or imaging center. These payment differences incentivize hospitals to acquire physician practices and bill insurers and patients at the higher rate, which raises costs without improving care.
Medicare should pay the same amount for the same service, regardless of where it is delivered. This could save taxpayers and beneficiaries nearly $200 billion over a decade and reduce hospital consolidation, which would lower private insurance premiums.
But payment disparities aren’t the only driver of hospital consolidation. Certain state-level policies encourage local hospital monopolies. Most states have certificate-of-need laws that require potential new providers to go before a government board, often controlled by incumbent players, for permission to enter the health care market. By protecting existing hospitals and creating barriers to entry, they raise prices and reduce medical access. These laws should be repealed. In addition, the federal government should significantly increase its antitrust investigations and enforcement.
Health care affordability also requires controlling Medicare costs. Growth in per-beneficiary spending for Medicare should not outpace the growth of the overall economy. Yet Medicare costs per senior have been rising roughly 5 percent annually for the past 25 years, and in 2025, Medicare spent nearly $19,000 per beneficiary. Such high spending crowds out other public priorities such as infrastructure, defense, research and education. Higher-income seniors already pay more for Medicare through higher premiums, but Congress should further increase what they pay. Congress should also reform Medigap supplemental insurance, which encourages unnecessary spending by shielding beneficiaries from nearly all out-of-pocket costs.
Most seniors now choose Medicare Advantage, in which private insurers oversee health benefits. But the current system encourages insurers to inflate enrollees’ medical diagnoses — a practice known as upcoding — to increase federal payments. To fix this, the federal government should increase audits of plans with questionable coding practices, penalize plans that upcode excessively and use machine learning and AI to improve the accuracy of payments based on patients’ health risks. Lawmakers should also reform or eliminate the more than $13 billion Medicare Advantage quality bonuses, which are often gamed and have not driven significant improvements in quality of care.
Beyond Medicare, Congress should give patients with employer-provided insurance more control over their plans. Individual Coverage Health Reimbursement Arrangements already allow employers to provide tax-advantaged contributions that workers can use to buy individual market coverage. This makes insurance easier to move from employer to employer. Congress should build on these plans by giving workers more flexibility in how they use their employer contributions.
The government could also provide incentives for insurance companies to offer longer-term contracts. Annual enrollment increases insurers’ advertising and administrative costs. Multiyear contracts, such as those with five-year durations, would reduce churn, strengthen insurers’ incentives to keep their enrollees healthy, lower costs and eliminate the frustrating annual cycle of choosing health insurance.
Additionally, the health system needs to be more operationally efficient. AI can help improve productivity and lower costs by reducing administrative burdens, giving clinicians more time with patients, improving clinical decisions and automating labor-intensive processes. Clear standards and regulations for evaluating clinical AI and clarification on who would be liable for AI errors would help clinicians adopt these tools.
Federal and state lawmakers should also simplify coding and billing. The United States has the highest cost for processing payments to physicians and hospitals. There are too many billing codes, too much variation in documentation requirements by insurance companies and too many outdated processes that still rely on faxes and manual paperwork. Standardization and digitization of billing, contracting and payment processes would simplify administrative work. Similar reforms could streamline licensing and credentialing so physicians and other clinicians do not have to repeatedly submit the same information to different states, hospitals and insurers. These reforms could collectively save hundreds of billions of dollars for patients and taxpayers.
We came together because the health care system is not delivering adequate value. If we can find compromises, then so can lawmakers — no matter their political orientation.
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