[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                  BREAKING UP HEALTH CARE MONOPOLIES:
                    EXAMINING THE BUDGETARY EFFECTS
                      OF HEALTH CARE CONSOLIDATION

=======================================================================

                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

             HEARING HELD IN WASHINGTON, D.C., MAY 23, 2024

                               __________

                           Serial No. 118-14

                               __________

           Printed for the use of the Committee on the Budget
           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]           


                       Available on the Internet:
                            www.govinfo.gov
                            
                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
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                        COMMITTEE ON THE BUDGET

                  JODEY C. ARRINGTON, Texas, Chairman
                  
RALPH NORMAN, South Carolina         BRENDAN F. BOYLE, Pennsylvania,
TOM McCLINTOCK, California             Ranking Member
GLENN GROTHMAN, Wisconsin            JANICE D. SCHAKOWSKY, Illinois
LLOYD SMUCKER, Pennsylvania          EARL BLUMENAUER, Oregon
MICHAEL C. BURGESS, Texas            DANIEL T. KILDEE, Michigan
EARL L. ``BUDDY'' CARTER, Georgia    SCOTT H. PETERS, California
BEN CLINE, Virginia                  BARBARA LEE, California
BOB GOOD, Virginia                   LLOYD DOGGETT, Texas
JACK BERGMAN, Michigan               JIMMY PANETTA, California
A. DREW FERGUSON IV, Georgia         JENNIFER WEXTON, Virginia
CHIP ROY, Texas                      SHEILA JACKSON LEE, Texas
BLAKE D. MOORE, Utah                 ILHAN OMAR, Minnesota,
DAVID G. VALADAO, California           Vice Ranking Member
RON ESTES, Kansas                    DAVID J. TRONE, Maryland
LISA C. McCLAIN, Michigan            BECCA BALINT, Vermont
MICHELLE FISCHBACH, Minnesota        ROBERT C. ``BOBBY'' SCOTT, 
RUDY YAKYM III, Indiana                  Virginia
JOSH BRECHEEN, Oklahoma              ADRIANO ESPAILLAT, New York
CHUCK EDWARDS, North Carolina

                           Professional Staff

                      Gary Andres, Staff Director
                  Greg Waring, Minority Staff Director
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held in Washington, D.C., May 23, 2024...................     1
    Hon. Jodey C. Arrington, Chairman, Committee on the Budget...     1
        Prepared Statement of....................................     4
    Hon. Brendan F. Boyle, Ranking Member, Committee on the 
      Budget.....................................................     7
        Prepared Statement of....................................     9
    The Alliance to Fight for Health Care, submission for the 
      record.....................................................    12
    American Academy of Family Physicians (AAFP), submission for 
      the record.................................................    21
    American College of Emergency Physicians (ACEP), submission 
      for the record.............................................    35
    Americans for Fair Health Care (AFHC), submission for the 
      record.....................................................    43
    AHIP, submission for the record..............................    47
    American Hospital Association (AHA), submission for the 
      record.....................................................    51
    American Optometric Association (AOA), submission for the 
      record.....................................................    57
    Coalition for Patient-Centered Care (CPCC), submission for 
      the record.................................................    61
    Federation of American Hospitals (FAH), submission for the 
      record.....................................................    65
    The US Oncology Network, submission for the record...........    70
    Ms. Beth Waldron, submission for the record..................    76
    Dr. Chapin White Ph.D., Director of Health Analysis, 
      Congressional Budget Office................................    79
        Prepared Statement of....................................    81
    Dr. Benedic Ippolito Ph.D., Senior Fellow in Economic Policy 
      Studies, American Enterprise Institute.....................    84
        Prepared Statement of....................................    86
    Dr. Adam Bruggeman M.D., Orthopaedic Surgeon, Texas Spine 
      Care Center................................................    94
        Prepared Statement of....................................    96
    Ms. Sophia Tripoli MPH, Senior Director of Health Policy, 
      Families USA...............................................   110
        Prepared Statement of....................................   112
    Hon. A. Drew Ferguson IV, Member, Committee on the Budget, 
      submission for the record..................................   168
    Hon. A. Drew Ferguson IV, Member, Committee on the Budget, 
      submission for the record..................................   171
    Hon. A. Drew Ferguson IV, Member, Committee on the Budget, 
      submission for the record..................................   177
    Hon. A. Drew Ferguson IV, Member, Committee on the Budget, 
      submission for the record..................................   179
    Hon. A. Drew Ferguson IV, Member, Committee on the Budget, 
      submission for the record..................................   185
    Questions submitted for the record...........................   193
    Answers submitted for the record.............................   202

 
                  BREAKING UP HEALTH CARE MONOPOLIES:
                    EXAMINING THE BUDGETARY EFFECTS
                      OF HEALTH CARE CONSOLIDATION

                              ----------                              


                         THURSDAY MAY 23, 2024

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
210, Cannon Building, Hon. Jodey Arrington [Chairman of the 
Committee] presiding.
    Present: Representatives Arrington, Norman, McClintock, 
Grothman, Burgess, Carter, Good, Ferguson, Roy, Moore, Estes, 
Fischbach, Brecheen, Edwards, Boyle, Kildee, Peters, Panetta, 
and Balint.
    Chairman Arrington. Good morning. This hearing will come to 
order. Welcome to the Committee on the Budget's hearing on 
``Breaking Up Health Care Monopolies: Examining the Budgetary 
Effects of Health Care Consolidation.''
    I would like to welcome our panel of expert witnesses: Dr. 
Chapin White, Director of Health Analysis at the Congressional 
Budget Office; Dr. Benedic Ippolito from the American 
Enterprise Institute; Dr. Adam Bruggeman from Texas, sorry--
that wasn't in the script, that just kind of came out--an 
orthopaedic surgeon at the Texas Spine Care Center; and then 
Ms. Sophia Tripoli, Senior Director of Health Care Policy at 
Families USA and a former policy analyst, also, I believe, at 
the Centers for Medicare and Medicaid Services.
    So thank you all for being here. Thank you for lending your 
counsel and your insight and we appreciate your time.
    Well, I am going to yield myself such time as I may consume 
for an opening statement. I will try to keep it within the five 
minutes.
    This is a very important topic and important to me 
personally. Our national debt is approaching $35 trillion. 
These are stunning statistics and should be sobering for every 
American. We are adding $8 billion to the debt every day. Our 
gross debt-to-GDP is over 123 percent, which is higher than it 
was when we were fighting a world war and we are in relative 
peace and prosperity. We are in a bad way in terms of our 
Nation's fiscal health and it is rapidly declining.
    Even worse, so far this year, we are paying almost 60 cents 
on the dollar just to service the debt. That is the interest on 
the debt which, by the way, this year will exceed what we spend 
on all of national defense.
    There are also payments thus far this year. Our interest 
payments to date, this year are more than we spent on Medicare 
as well as our national security for this great Nation. Hard to 
believe.
    In order to reverse the curse we must address the biggest 
driver of our debt: Federal health care spending. In fact, the 
Congressional Budget Office projects the spending on major 
health care programs will nearly double and grow from $1.7 
trillion in 2024 to $3.2 trillion in 2034, three times larger 
in ten years, Federal health care spending, than what we spend 
on national defense.
    National health expenditures, which include everything from 
patient out-of-pocket cost to Federal and state spending on 
major health care programs, are projected to grow faster than 
our economy over the next decade, rising from $4.5 trillion or 
17 percent of total economic output to 20 percent of our 
economic output or GDP and would be over $7 trillion.
    Health care spending is expected to grow at 5.4 percent 
over the next ten years while GDP is going to grow--projected 
to grow up 4.6. Simply put, this isn't sustainable for the 
Federal budget, it is not sustainable for patients, nor is it 
sustainable for our taxpayers.
    This hearing today is important. We are going to focus on 
one of the key issues plaguing our broken health care system 
and driving the increased Federal spending, which is increased 
consolidation in health care markets, ``Big Medicine'' as I 
like to call it.
    Big Medicine consolidation across health care markets 
ranging from hospitals purchasing independent physician 
offices--we will delve into that--to insurance companies 
acquiring pharmaceutical benefit managers and even pharmacies 
themselves down the supply chain, and then we have other 
trends, but the data spells out a troublesome picture of the 
current state of health care markets and the impact of 
consolidation on spending. In fact, CBO stated that 
consolidation has increased Federal health spending and cost 
for patients while limiting their choices and decreasing 
patient access to quality care.
    There were over a thousand hospital mergers between 2002 
and 2020, and research has revealed the average price of 
hospital services increased in that period of time by $521 
after hospital mergers occur. Additionally, 41 percent of 
physicians are now vertically integrated with a hospital or 
health systems, an increase of 12 percent over ten years.
    In cancer care alone, in cancer care alone, over 700 
independent cancer clinics were acquired by hospitals over the 
period of 2008 to 2020. The cause and effect of this is clear. 
Prices for physician services in areas with high market 
concentration are between, statistically, 14 percent and 30 
percent higher than in areas with less consolidation.
    In the prescription drug supply chain, 79 percent of all 
drug chains--I am sorry, drug claims are now processed by three 
pharmaceutical benefit managers, all of which are vertically 
integrated into large health insurance companies.
    This vertical consolidation, which some will say is greater 
scale, greater efficiency bringing costs down, is actually 
shifting incentives and increasing drug costs for Americans.
    The House Budget Committee and the House Republican 
Conference have been leading the way to combat health care 
consolidation through policies and our Reverse the Curse 
balanced budget, such as site-neutral payment reform, which is 
by the way, a Democrat and Republican idea. I think it actually 
emanated with President Obama, but we agree with it.
    Equalizing payments for the same service through Medicare 
site-neutral reform while ensuring our rural providers are 
unaffected is not only common sense, it would save taxpayers 
over $150 billion in the 10-year budget window.
    More importantly, this policy would end the perverse 
incentive that is leading to hospitals acquiring independent 
physician offices, leaving the market with less competition, 
patients with fewer choices, and then, most importantly, our 
reform would ensure seniors will pay less out-of-pocket costs, 
and we believe that is the bottom line here in terms of our 
success objective.
    Lastly, the House Republican Lower Costs, More Transparency 
Act passed the House in December. It not only includes 
transparency reforms to improve health care markets, it also 
included a site-neutral payment for Part B physician-
administered drugs. So we are moving in the right direction in 
my opinion for sure.
    As Chairman I have made it clear this Committee takes its 
fiduciary duties to our taxpayer seriously, both Republicans 
and Democrats, which is why we are going to examine the effects 
of rising consolidation on the budget and discuss reforms 
necessary to reverse this trend, restore market competition, 
and reduce health care spending ultimately for the American 
people.
    That is what we want: access, lower cost. Nobody can afford 
health care at this point and I know we are all working towards 
that stated objective.
    With that, I yield to my Ranking Member and friend from the 
Keystone State for his opening remarks.
    [The prepared statement of Chairman Arrington follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Boyle. Well, thank you, Mr. Chairman, and thank you for 
holding this hearing today. When I first saw that you were 
holding a hearing called ``Breaking Up Monopolies'' I said, my 
God, Jodey is becoming a Democrat. This is great. I welcome 
with open arms the road to Damascus.
    But I have to say, I appreciate his thoughtful approach in 
general, but then specifically to this issue because it is so 
complex and, frankly, if there is an area that is hard to 
categorize as left or right it is the enormity that is our 
health care system.
    As we look and take a step back at where we are right now 
in the United States in 2024, when it comes to health care, 
there are some good news that I hope that we all should be able 
to cheer.
    First, the national uninsured rate hit an all-time low in 
American history last year with a record-breaking 21.3 million 
Americans signing up for health care coverage under the ACA. 
That is whether we call it Obamacare or originally Romneycare, 
the idea at long last has become popular and has worked.
    It is one piece of our rather hybrid health care system. 
Some people are on a direct government-provided health 
insurance such as the VA, some have health care-provided 
insurance through Medicare and Medicaid, some on the exchanges 
which, of course, I remind everyone again, pool together 
private plans, and then, of course, the biggest piece of all is 
the employer-provided health insurance.
    So we have had very good news. I hope people saw the New 
York Times article a couple months ago showing that actually, 
health care costs came down far greater in the last decade than 
anyone projected. So that is clearly good news that we can 
celebrate and that is why we can't turn the clock back and have 
to make sure that we preserve the gains that have been made.
    At the same time, as we take a step back and look at the 
whole system systematically, we spend approximately 17.5 
percent of our GDP on health care in the United States. 
Germany, the U.K., Canada, France, they are all below 10 
percent. So we are spending a much higher percentage of our GDP 
on health care than any of our peer countries and we aren't 
necessarily getting better health outcomes for those dollars.
    Why is that? How can we do better there in terms of 
getting, essentially, a better bang for our buck and bring down 
the costs?
    Now, as we move forward in looking at this, and 
specifically the consolidation in the industry that has 
happened over the last ten years, we have to realize it is not 
just patients that are affected by the industry, but it is 
providers and a lot of times it is physicians that are being 
affected, indeed adversely affected by this dramatic 
consolidation.
    You know, doctors who just want to be able to have a 
standalone practice are finding that more and more difficult. 
Theirs is a perspective that also needs to be listened to. It 
is obviously a crucial part of the health care system.
    So I hope this is the first of a number of hearings that we 
will have in this realm. We all know that as we look toward the 
early part of the next decade, we run into funding issues when 
it comes to the Medicare trust funds. We are going to clearly 
have to be looking at ways in which we can become more 
efficient when it comes to Medicare, yet at the same time, make 
sure that by a cut here and a cut there to physicians and 
doctors, we don't create a death spiral in which we reach the 
point where providers actually just want to opt out of the 
system altogether.
    Let's be wary of death by a thousand cuts as we are looking 
to making the Medicare trust funds solvent for the next 
generation. I am confident that we can do that.
    I end where I began: When you look at all of our peer 
countries that have different kinds of systems, U.K. and Canada 
is more a government-run. The government has the hospitals, the 
physicians are government employees.
    I think there are very few people in the United States who 
would think that that is an appropriate model for the U.S. that 
would work.
    You have other hybrid types of systems, though. France, 
Germany, Japan, where the government plays a stronger role in 
providing insurance for everybody, but it is the private 
sector. Doctors and hospitals are privately run within that 
system.
    Whichever model you choose, all of them seem to be spending 
less and are spending less on health care than we are in the 
United States. So focusing on what we can do to bring down 
costs, be more efficient, and ultimately provide better 
outcomes for all in the system, especially patients, is what we 
need to do as a country.
    And with that, I will yield back.
    [The prepared statement of Ranking Member Boyle follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Arrington. I thank my friend from Pennsylvania, 
and in the interest of time, if any other Member has an opening 
statement I ask that you would submit it for the record. I will 
hold the record open to the end of the day to accommodate those 
Members who may have not yet prepared written statements.
    [The information follows:]
   [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Arrington. Once again, welcome to the witnesses. 
Thank you for being here. You will have five minutes to provide 
your opening remarks and then we will get into Q&A.
    Dr. White, you may begin when you are ready. I yield five 
minutes.

  STATEMENT OF DR. CHAPIN WHITE, DIRECTOR OF HEALTH ANALYSIS, 
                  CONGRESSIONAL BUDGET OFFICE

    Dr. White. Thank you, Chairman Arrington, Ranking Member 
Boyle, and Members of the Committee. I appreciate the 
opportunity to appear before you today and in consultation with 
the Budget Committee staff I have focused this testimony on 
consolidation among health care providers and its impact on the 
Federal budget.
    The markets for physician and hospital services have become 
increasingly consolidated in recent decades. The share of 
hospitals affiliated with a health system increased from 53 
percent in 2005 to 68 percent in 2022 and the share of 
physicians employed by a hospital or health system increased 
from 29 percent in 2012 to 41 percent in 2022.
    The Federal Government subsidizes health care for enrollees 
in private health insurance and for enrollees in public 
programs and consolidation increases costs in both cases. 
Consolidation can affect the Federal budget by increasing 
prices in private health insurance, by increasing the intensity 
of services provided through public programs, or by shifting 
services to more costly settings.
    Consolidation gives providers more bargaining power, 
allowing them to negotiate higher prices with private insurers. 
Those higher prices increase private insurers' spending on 
claims, which in turn increases premiums.
    In employment-based health insurance an increase in 
premiums shifts a portion of employees' compensation away from 
taxable wages to tax-favored health benefits. That shift 
increases the Federal deficit.
    In nongroup insurance, higher premiums increase premium tax 
credits in the health insurance marketplaces. CBO projects that 
Federal subsidies for private health insurance will total $6.4 
trillion through 2033, so even small changes in prices paid by 
private insurers could impact the Federal budget.
    In the fee-for-service programs in Medicare and Medicaid, 
the Federal and state governments set providers' prices through 
laws and regulations and managed care plans tend to follow 
those prices. So in that context, consolidation among providers 
generally does not increase the prices paid.
    However, consolidation can increase spending in Medicare 
and Medicaid by encouraging providers to deliver more services, 
to provide more intensive services, or to supply care in more 
costly settings.
    If hospitals acquire physician practices, certain services 
provided by those physicians may be billed at hospital 
outpatient rates, which include facility fees, and are 
generally higher than the rates paid to independent physician 
practices.
    Physicians whose practices are acquired by hospitals may 
send their patients to receive care in hospitals rather than in 
less costly settings or they might recommend more costly 
treatments. Those changes affect the Federal budget by directly 
increasing Medicare and Medicaid spending.
    CBO expects that providers consolidation will continue over 
the next decade. In 2022, the agency identified several 
policies that could reduce that consolidation, including 
further equalizing Medicare payments across sites of service 
and expanding Federal agencies' antitrust capacity.
    We concluded that adopting a broad set of such policies 
would avert up to a quarter of the growth in consolidation. We 
estimated that the resulting reduction in Federal subsidies for 
private coverage would shrink the Federal deficit in 2032 by 
0.2 percent to 0.6 percent.
    The effects of the policy CBO identified would be limited 
for two main reasons. First, health care provider markets are 
already highly consolidated and undoing that consolidation 
would be difficult, particularly within a 10-year budget 
window.
    Second, some of the factors that drive consolidation are 
not amenable to change by legislation. For instance, providers 
might still seek to expand service lines or achieve economies 
of scale and providers would still benefit from consolidation 
because they would gain bargaining leverage with private 
insurers.
    CBO focuses principally on the effects of provider 
consolidation on the Federal budget, but policies that promote 
competition may have other effects outside the agency's 
purview, such as fostering greater patient choice or provider 
independence.
    Thank you. I look forward to questions.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Arrington. Thank you, Dr. White, and now we will 
yield five minutes to Dr. Ippolito.

 STATEMENT OF DR. BENEDIC IPPOLITO, SENIOR FELLOW IN ECONOMIC 
         POLICY STUDIES, AMERICAN ENTERPRISE INSTITUTE

    Dr. Ippolito. Well, thanks very much, Chairman Arrington 
and Ranking Member Boyle, and Members of the Committee. My name 
is Ben Ippolito. I am an economist at the American Enterprise 
Institute.
    Any effort to seriously address the long run fiscal 
imbalance is going to have to grapple with health care in the 
U.S. Current spending on Medicare/Medicaid and the ACA alone by 
the Federal Government exceeds the entire discretionary budget 
at this point, let alone other Federal spending, including what 
Dr. White was referring to in the tax exclusion and the cost of 
supporting the employment-based system.
    I want to emphasize the Chairman mentioned that we have 
accrued this debt in relatively placid times. I will also 
highlight we have had relatively slow growth of health care 
costs by U.S. historical standards over the last 15 years or 
so, with the exception of COVID.
    The fact that national health expenditures have hovered 
around 17 or so percent of GDP for more than a decade is 
historically anomalous, and so, if we resume more typical 
growth rates, the budget challenge is going to grow much, much 
more pronounced over time.
    Consolidation is, of course, one of many factors that leads 
to rising health care costs, and it does so in at least a few 
ways I will highlight. The first is that consolidation in many 
forms, including providers, but other forms--insurers, PBMs, 
things like that--tends to increase commercial health care 
costs.
    Those costs are reflected in premiums--higher premiums and 
lower wages that reduce income taxes collected by the Federal 
Government. The cost of that provision is over $300 billion 
today and every time commercial health care costs grow, the 
cost of that tax exclusion grows as well.
    Secondly, consolidation can increase spending in public 
programs directly, and perhaps most notably, Medicare pays 
higher rates if a service is delivered in a hospital outpatient 
department than a physician's office, and while that does make 
sense for lots of services, for relatively routine things that 
can be produced or done in a variety of settings, things like 
drug administration, that makes a lot less sense.
    That gives a major incentive for hospitals to acquire 
physicians' practices and bill at the higher Medicare rate. 
That directly increases Medicare spending, both to the 
government and to beneficiaries. It also has the effect of 
encouraging consolidation and increasing provider market power 
in the commercial space, thereby increasing commercial health 
care spending as well.
    There is a host of policies that can affect consolidation 
in health care markets. I am going to focus on sort of 
conceptual goals. The first is do no more harm. Try to end 
incentives that further incentivize consolidation in these 
markets.
    Dr. White already mentioned we are at a place where many 
markets are already relatively consolidated. Further 
consolidation is very painful.
    Things like the lack of site-neutral payments in Medicare 
or the structure of the 340B drug discount program are examples 
of program features that tend to reward consolidation. Another 
one that is not a single policy is administrative costs. Adding 
additional administrative burdens, reporting requirements that 
are onerous to physicians, tends to make it more challenging.
    It is easier for a large system to absorb those kinds of 
things efficiently than it is for a single standalone office. 
So anything that reduces those kinds of administrative burdens 
tends to help.
    Second, antitrust agencies have to at least be aware of 
concerning transactions and that includes the now-common 
situation where entities accumulate large market shares through 
many less transparent small transactions. That is somewhere 
where Congress can help those agencies.
    Finally, to the extent you can, there is value in trying to 
moderate how much consolidated entities can leverage their 
market power, and there are some contracting provisions that 
you can think about that tend to work in that direction.
    I am going to conclude with a pragmatic point, which is 
that efforts to address these issues often raise concerns about 
reduced access if they cause some financially vulnerable 
entities to close, particularly hospitals, and that is a real 
concern.
    However, I do not think that is a compelling argument for 
inaction. Congress can instead pass legislation that 
comprehensively addresses poorly designed incentives that 
encourage consolidation and, if needed, subsidize or help out 
those rural or otherwise distressed providers directly in ways 
that do not further incentivize consolidation.
    And so accommodating those kinds of concerns does not need 
to derail necessary work to try and keep Federal health 
spending on a sustainable path. I thank you for having me and 
look forward to questions.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Arrington. Thank you, Dr. Ippolito.
    Dr. Bruggeman, we yield five minutes now for your opening 
statement.

  STATEMENT OF DR. ADAM BRUGGEMAN, M.D., ORTHOPAEDIC SURGEON, 
                    TEXAS SPINE CARE CENTER

    Dr. Bruggeman. Thank you, Chairman Arrington, Ranking 
Member Boyle, and distinguished Members of the House Budget 
Committee. Thank you for the opportunity to testify today on 
the critical topic of consolidation in our health care system.
    My name is Dr. Adam Bruggeman. I am an orthopaedic spine 
surgeon from San Antonio, Texas. I also chair the Advocacy 
Council of the American Association of Orthopaedic Surgeons, 
and I am here to share my perspective of consolidation as a 
physician and an owner of an individual, independent medical 
practice.
    I have witnessed firsthand the alarming trends of 
consolidation sweeping across the U.S. health care system. From 
2019 to 2021, there was a 25 percent increase in hospital and 
corporate-owned practices. Hospitals and large corporations are 
rapidly acquiring independent practices, undermining 
competition, and driving up costs for patients and payers 
alike.
    A mounting body of evidence reveals that consolidation 
drives up prices for health care services, including for common 
orthopaedic procedures like knee replacements and spinal 
fusions, which are approximately 30 percent higher in 
concentrated markets compared to competitive ones.
    Research also indicates hospitals engaging in consolidation 
impose prices 40 percent to 50 percent higher compared to what 
they would have charged had they not merged. The evidence is 
clear. Consolidation leads to higher health care prices and 
consequently erodes affordability and access to care.
    Allow me to further illustrate the cost of consolidation 
with an example from my own backyard. One of my colleagues 
recently joined a large hospital system after facing economic 
challenges maintaining an independent practice.
    This consolidation triggered site-of-service differentials 
and the financial toll was staggering in the millions to my 
community. One surgeon in one community costing millions in 
lost revenue to taxpayers, to local businesses, to employers, 
and this scenario is playing out in communities across our 
entire Nation.
    Consolidation drives up premiums for large employers in the 
area providing health insurance to their employees and leads to 
higher out-of-pocket expenses for individual patients needing 
surgery or other procedures.
    So what is driving this consolidation crisis? In today's 
health care landscape, physicians across America find 
themselves at a breaking point. Overhead costs keep rising. Our 
reimbursement keeps falling, and on top of that, we are buried 
under piles of bureaucratic red tape that pulls us away from 
patient care.
    Together these pressures make it extremely difficult for 
physicians to keep their independent practices afloat and lead 
many to choose employment over owning their own practice. The 
consequences of unchecked consolidation extend beyond higher 
prices for common procedures.
    Unfortunately, we witnessed firsthand the detrimental 
effect of consolidation during the recent Change Healthcare 
cyber-attack, which directly impacted my practice and 
exemplified how consolidation and vertical integration can 
amplify disruptions across the entire health care system.
    We are now seeing how concentrating more health care 
spending through a small number of entities can lead to 
singular points of failure. When an adverse event occurs at one 
of these consolidated giants, the impacts are more severe. They 
are more costly, and they are more difficult to resolve.
    To combat consolidation threats to affordability and 
access, Congress must enact reforms to overhaul how physicians 
are compensated. We are trapped in a vicious cycle. Rising 
costs and declining reimbursement are making it harder for 
physicians to keep our practices viable, pushing many towards 
consolidation, which then in turn drives higher costs for 
patients and payers.
    Unless we make long-term structural changes to how 
Medicare, and by extension the rest of health care, pays, 
values the services physicians provide, the idea of the 
independent physician will continue to fade from our health 
care system.
    For that model of health care delivery to continue to be a 
financially viable option for physicians we must have some form 
of long-term financial security that the current patchwork of 
annual short-term payment updates fails to provide to those who 
are not salaried employees of larger institutions.
    Congress also needs to repeal the moratorium on physician-
led hospitals. Studies show that they provide the same or 
higher quality of care at far lower prices compared to 
nonphysician-owned facilities. Ultimately, any action must be 
coupled with broader reforms to stabilize physician payments 
long-term, reduce administrative burdens, and inject 
competition into marketplaces to empower physicians to thrive 
independently.
    Allowing these physicians to practice in the setting that 
is best for them, for their patients, and for their broader 
community should be the absolute hallmark of our health care 
system.
    With that, I urge the Committee to act and work towards 
solutions that promote competition in health care. The 
consequences of inaction are simply too high for physicians, 
for our patients, for employers, for taxpayers, and, 
ultimately, for our Nation's health care standards. Thank you 
for your attention to this critical issue.
    [The information follows:]
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    Chairman Arrington. Thank you, Dr. Bruggeman.
    Ms. Tripoli, the floor is yours for five minutes.

STATEMENT OF SOPHIA TRIPOLI, SENIOR DIRECTOR OF HEALTH POLICY, 
                          FAMILIES USA

    Ms. Tripoli. Good morning, Chairman Arrington, Ranking 
Member Boyle, Members of the Committee. Thank you for the 
opportunity to testify today. On behalf of Families USA, a 
leading national nonpartisan voice for health care consumers 
working to ensure the best health and health care are equally 
accessible and affordable to all, I want to thank you for this 
critical discussion.
    No American should have to choose between going to see 
their doctor and buying groceries to feed their family, yet 
almost half of all Americans can't get needed medical care 
because of the cost. A third say that the cost of care prevents 
them from securing basic needs like food and housing and 40 
percent of Americans face medical debt.
    As a Nation we spend more than $4 trillion per year on 
health care, yet the health of our Nation's families is 
suffering. Since 1960, total national spending on health care 
as a percentage of GDP increased from five percent to more than 
17 percent and is projected to increase to 20 percent, or $7.2 
trillion, by 2031.
    Health care now accounts for almost one-fifth of our 
Nation's economy, yet we have some of the worst health 
outcomes, lowest levels of access to care, and greatest 
inequities compared with peer countries, and nearly a quarter 
of a million people a year are killed by the health care system 
from medical errors, infections, and the like. Simply put, our 
health care system has lost its way.
    Our unaffordable health care spending is primarily driven 
by high and rising health care prices. We pay more than 
anywhere else in the world for prescription drugs, hospital 
stays, specialty care, MRIs, CAT scans, births, and time in the 
intensive care unit. These higher prices result in nearly $240 
billion in waste annually to the health care system.
    Our Nation's high health care prices and abysmal health 
outcomes are the result of broken financial incentives that 
reward building local monopolies and price gouging instead of 
rewarding successes and promoting the health, well-being, and 
financial security of families.
    Health care industry consolidation has eliminated the 
competition and allowed monopolistic pricing to push our 
Nation's families to the brink of financial ruin. Nowhere is 
this clearer than looking at the price of drugs and hospital 
care, which together account for 40 percent of our Nation's 
health care spending.
    For more than a decade, drug prices increased 20 percent 
per year, far exceeding inflation, and since 2015, hospital 
prices increased 31 percent nationally accounting for one-third 
of U.S. health care spending, growing more than four times 
faster than workers' paychecks.
    These higher prices are passed on to families as annual 
increases in insurance premiums and cost sharing and become 
profit margins for large health care corporations. As a result, 
we cannot afford to retire when we want, buy a home, send our 
kids to college, or even meet basic needs like paying for food 
or rent.
    The successive spending has created an economic crisis for 
the Federal Government, state governments, and taxpayers, 
limiting our ability as a Nation to educate our children, 
protect our neighborhoods, care for our elderly, and build 
critical infrastructure like bridges and roads.
    But it doesn't have to be this way. We know what is driving 
the crisis and how to fix it. Solutions can be deployed right 
away to address the root causes of our Nation's affordability 
crisis by ending these pricing abuses and restoring competition 
in health care.
    This Committee is responsible for advancing budget 
priorities that reflect the values of families across the 
country and to invest in our country's future, build a strong 
economy, and protect and improve health care and other vital 
services for America's families.
    There is a bipartisan pathway to generate budget savings 
without undermining the promises to seniors, veterans, moms and 
babies, and people with disabilities.
    We urge this Committee to consider well-vetted bipartisan 
solutions to increase transparency on prices, health care 
quality, and ownership data; to address hospital billing 
practices and payment differentials that drive consolidation 
and increase costs; to limit anti-competitive behavior in 
contracts; and to strengthen FTC and DOJ enforcement of anti-
competitive practices.
    I would like to finish my remarks with the story of Ben Los 
and his 5-year-old son from Colorado Springs to illustrate the 
impact of unchecked corporate health care greed on our Nation's 
families. In 2022, Ben and his wife rushed their son to the 
doctor after he began experiencing seizures. They were referred 
to a specialist in their network who ordered an EEG scan and 
assured them that the scan was covered by their insurance.
    Two months later, the Los family received a bill for 
$2,500. When they called the hospital to ask about the bill 
they were told it was a facility fee. The physician service was 
covered, but now they had to actually pay the hospital.
    Ben elevated the issue to the hospital administration 
leadership and was able to negotiate a reduction to his bill 
because it was classified as ``charity care.'' Frustrated by 
this experience, Ben investigated the hospital, but found it 
nearly impossible to determine who actually owned it. It was a 
giant black box.
    When he finally discovered the owner, he found that this 
particular system raked in billions of dollars in profits just 
in the first nine months of 2022, yet was claiming they needed 
to charge the Los family a $2,500 facility fee to pay their 
hospital staff. This is a national scandal.
    This Committee has a responsibility to put the needs of our 
Nation's families ahead of the greed of big health care 
corporations. I thank the Committee for your time, and I look 
forward to answering any questions.
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    Chairman Arrington. I thank the gentlelady, Ms. Tripoli, 
for her comments.
    Now we will move into the Q&A portion of the hearing, and I 
will yield myself five minutes. I find myself in an awkward 
situation here where I am agreeing more with the Democrat 
witness than maybe in any other hearing.
    Ms. Tripoli, I think you did, I mean, price transparency, 
market forces, healthy competition, and limiting those perverse 
incentives that restrict competition and choice for patients, 
and I am going to start with you. I am trying desperately to 
find consensus solutions that my Democratic colleagues can 
support, my Republican colleagues can get excited about with 
respect to a more efficient health care system on the Federal 
side.
    And there seems to be one big obvious one, and I continue 
to give President Obama credit for including it in his budget, 
and that is site-neutral payments. I just don't see any 
business person in America who would run their business with 
that kind of incentive structure where you are paying one 
entity more than you are another entity for the same procedure, 
same outcome, and in many instances, the same health care 
professionals because often those independent physicians and 
their health care group is gobbled up by the hospital that gets 
paid more in this scenario.
    This has been going on for a long time. We could save $150 
billion, and we can reduce the cost, out-of-pocket cost for 
seniors, and we can just improve the system altogether. It 
seems to me the most obvious.
    Where are you on that? You were at CMS, presumably this 
neutral arbiter on what works, what doesn't work. You have seen 
a lot of ideas. Is this an idea worth us considering?
    Ms. Tripoli. Well, I certainly can't speak on behalf of 
CMS, but I can speak on behalf of Families USA and we 
absolutely support an enactment of a comprehensive site-neutral 
payment policy. MedPAC has been recommending one for years.
    It is very bipartisan. It is a no-brainer. It corrects a 
fundamental distortion, an economic incentive in the Medicare 
payment system, actually, that incentivizes hospitals to buy up 
physician practices, rebrand them as outpatient departments so 
that they can generate a higher reimbursement.
    And so that policy is all about ensuring you are paying the 
same price for the same service regardless of the location of 
where you get the service. As you mentioned, it is a huge saver 
back to the Federal Government and back to beneficiaries, and 
if it were extended into the commercial market there are also 
even bigger savings projected as well, but it is absolutely an 
essential policy, and we applaud the House of Representatives 
for enacting, or for passing a more limited provision, which is 
a huge step forward.
    Chairman Arrington. And let me be clear. Hospitals have 
their role. They need to be motivated and incentivized to do 
that very well. Physicians need to be motivated. The ecosystem 
has to work.
    Pharma produces technologies that save our lives and 
improve our quality of lives. Insurance can control cost. You 
know, I don't want to demonize any one of those groups, but 
their animal spirits in the private sector are going to pursue 
profitability and shareholder value. That is what they do.
    I don't blame any of them for some of the things that go 
on. I blame us for not having the right incentive structure. 
Incentives drive behavior. That is what we do as policymakers. 
Let's get the incentive right, let's get the behavior right, 
and the outcomes will follow, and it is unacceptable that this 
great country and our health system is the most inefficient of 
all developed nations. I mean, what the heck? Right?
    So, Dr. Bruggeman, with site-neutral, I quoted a statistic 
of 700 independent cancer clinics, just in the oncology space, 
were acquired by hospitals from 2008 to 2020. It seems pretty 
significant. Are you seeing this trend in your market there in 
San Antonio in the great State of Texas?
    Dr. Bruggeman. Yeah. We are certainly seeing consolidation 
and it is consolidation because of other consolidation. When 
the insurance carriers, the top three insurance carriers in the 
State of Texas control 82 percent of the market, well, what are 
physicians to do to try and contract and negotiate? They are 
going to have to consolidate.
    What are hospitals going to do, which only control 40 
percent of the market, the top three only control 40 percent? 
They are going to have to consolidate.
    So we are seeing consolidation in response to the 
incentives, as you said, which is that they are trying to 
renegotiate their prices and ensure they increase with 
inflation every year.
    Chairman Arrington. So can I just summarize and tell me if 
this is the right way to look at it, the fact that there is a 
disparity in reimbursement and that with respect to hospitals 
and independent practices, physician practices, creates an 
uneven playing field and then the pressure is all the greater 
to not compete, and just, if you can't beat them, join them, 
again, which limits our choice and makes the costs go up. Is 
that a fair characterization?
    Dr. Bruggeman. It is absolutely correct.
    Chairman Arrington. Okay.
    With that, I yield five minutes to the Ranking Member for 
his questions.
    Mr. Boyle. Well, thank you and thank you to all the 
witnesses for being here and taking the time and your 
testimony.
    And thank you especially to Ms. Tripoli and your testimony 
for putting the human face on this conversation. Sometimes with 
all the facts and the figures it can get lost that we are 
talking about fellow Americans whose lives are upended 
sometimes by our health care system.
    In the spirit that the Chairman had with directing his 
first question to the Democratic witness, let me return the 
favor and direct a question to you, Dr. Bruggeman. While this 
wasn't prearranged, we both independently talked about the same 
thing in our opening testimony about the fee and the fee cuts 
within Medicare for physicians and for providers.
    I happen to be a cosponsor of H.R. 2474, which would index, 
it would provide annual inflation-adjusted payments to 
providers. It would provide that certainty.
    It would be indexed to the MEI, the Medicare Economic 
Index, in order to help physicians and, again, ensure they 
remain in the system and that there is certainty moving 
forward.
    I was wondering what you think about that approach? How 
necessary is it or not at all? And if you could speak more to 
that?
    Dr. Bruggeman. Yeah. I think we are at a critical juncture 
right now. The consolidation is occurring not because 
physicians want to give up their practices and become employed. 
It is occurring because they have no choice.
    We are not seeing an ability to look forward to our future 
and see where things are going in health care is going to be a 
good place for physicians. Right now if you are a physician, 
they are looking at getting less than inflation every year 
while your costs are going up.
    It just doesn't make any sense. Why would our best and 
brightest Americans decide to become doctors in the future? Who 
is going to take care of us as we go forward?
    We have to have some economic certainty to the future. We 
can't fix what we have done before. What happened before is 
what it is, but going forward we have to have inflationary 
updates.
    Mr. Boyle. Well, and you alluded to the consolidation as 
playing a role here. So it is a perfect segue. I wanted to 
bring in Dr. White.
    In your written testimony you shared the striking 
statistics. You talked about what a recent trend this has been 
over the last decade or 15 years.
    The share of hospitals affiliated with a health system 
increased from 53 percent in 2005 to 68 percent in 2022, and 
the share of physicians employed by a hospital or a health 
system increased from 29 percent in 2012 to 41 percent in 2022.
    And reading a little bit further along in your testimony, 
you predicted, or CBO projected that this trend will not stop 
and will continue.
    I was wondering if you could provide, you know, kind of 
meat on that bone and a little bit more about if we don't do 
anything what you would expect the next ten years to look like 
and where we would be in 2034 on the physician and hospital 
side and the further consolidation?
    Dr. White. We expect the trends that you just cited to 
continue and the forces are aligned for those trends to 
continue. There is bargaining leverage with private insurers. 
There is the lack of site-neutrality. There is 340B.
    There are administrative burdens that can be especially 
heavy for independent practices. There is pressure to join ACOs 
and value-based payment arrangements. So there are many----
    Mr. Boyle. At roughly the same pace that we have seen in 
the last decade?
    Dr. White. That is our expectation.
    Mr. Boyle. I mean, to the best of, you know, your ability?
    Dr. White. Yeah. Yeah. That is our expectation.
    Mr. Boyle. And if you were to identify one thing, keeping 
in mind that the biggest enemy to the free market is monopoly, 
what would be just one thing, if you could, that you would 
recommend to Congress to focus on to attempt to disincentivize 
the drive to consolidation?
    Dr. White. So we would never recommend policy.
    Mr. Boyle. I know. Within your ethical constraints as CBO.
    Dr. White. Yes, but the policies that clearly play a major 
role are a lack of site-neutrality. That clearly is a heavy 
thumb on the scale.
    There is also just the backdrop of private insurers being 
in the position of negotiating prices with providers, and the 
bigger those providers are, the more of the market they 
control, the more leverage they have. That isn't really 
amenable to legislation.
    And there is FTC enforcement that is--the policy options 
are relatively limited compared to the underlying forces that 
seem to all be pushing in the direction of more consolidation.
    Mr. Boyle. You know, I just----
    Dr. White. I want to make that----
    Mr. Boyle. If you spare me here about 30 seconds or so I 
will conclude with one anecdote back from when I was a state 
legislator in Pennsylvania, and I am from the southeastern part 
of the state. This was in Western Pennsylvania.
    We had a major issue that concerned really all of us that 
in Western Pennsylvania, around the Pittsburgh area, you had 
one hospital system. You would know what I am talking about. I 
can tell. We had one hospital system that basically gobbled up 
every other hospital, and we had one mega insurance company 
that gobbled up every insurance company, and those two went to 
war with one another.
    So you had basically one behemoth over here on the 
hospitals, one behemoth over here on the insurers, and they 
decided to not basically recognize each other and get into this 
Cold War.
    Well, who lost in that Cold War? All of the people who 
lived in Western Pennsylvania, and it took, over a long period, 
frankly, government getting involved to end this death stare 
between the two behemoths.
    We want to make sure that never again happens whether in 
Pennsylvania or anywhere else. With that, I will yield back.
    Chairman Arrington. I thank my friend from Pennsylvania, 
and now yield to the Chairman of our Health Care Task Force and 
a leader on all things health care for the United States 
Congress, Mr. and Dr. Michael Burgess of Texas.
    Mr. Burgess. Thank you, Chairman. You know, I was going to 
let you go on another 15 minutes with that introduction.
    Dr. Bruggeman, thank you so much for being here today. I 
know how hard it is to take time away from your practice, but I 
cannot emphasize the importance of having a practicing 
physician on our panel. That is rare. We generally don't 
include practicing physicians, but you are on the front lines 
and you do interact with patients every day, and it is you more 
so than anyone else who understands that you are the advocate 
for the patient in this equation. There is no three-letter 
acronym who is in charge of you. There is no large Federal 
agency who is in charge of you, but you have to sit down and 
have that interaction with the patient in the treatment room or 
the operating room, and it is that service that you provide.
    Without the practicing physician at the forefront of our 
system, my thesis is it loses so much inherent good if it is we 
just turn it all over to the insurance company or worse. So 
thank you for being here. I know what a sacrifice it is and 
thank you for being on the front lines every day and taking 
care of your patients.
    So let's talk just a little bit, I mean, you are on the 
front lines. What is it that is the driving force that causes 
independent practitioners to give up and join into some large, 
consolidated group?
    Dr. Bruggeman. I mean, it is just like any other business, 
and again, thank you for your remarks, and I am more than happy 
to be here and testify on behalf of my patients and my 
colleagues.
    You know, any business you have got to balance the income 
and the expenses, and when your income is constantly going down 
and your expenses are constantly going up and you went into 
medicine to take care of patients, not to deal with 
administrative burdens, people just give up, and they say I am 
going to give up autonomy. I am going to give up control of my 
practice to let somebody else worry about the balance sheet and 
let somebody else worry about all these administrative burdens 
because I just want to get back to taking care of patients.
    Mr. Burgess. You know, interestingly enough, Scott Copley 
when he was at AEI years ago came and talked to our health care 
caucus right after the passage of the Affordable Care Act in 
2009 and warned us about this legislation more so than anything 
else that has happened in his lifetime would drive 
consolidation in the health care space, and the results would 
not be good and now here we are 15 years later understanding 
just what it was he meant by that.
    But, Dr. Bruggeman, staying with you for a moment, you 
mentioned how--well, let me just ask you because it has kind of 
come up in several different ways, and I want to give the 
Ranking Member a chance to understand how important the concept 
of physician ownership and physician-led organizations in the 
health care space, how important that is in being a 
counterweight to the forces of consolidation.
    Dr. Bruggeman. Yeah. I think, obviously, physicians, when 
they start, we take this famous Hippocratic Oath that we are 
going to do good for our communities and for our patients, and 
so the critical piece of this is that physicians need to lead 
health care, and the fact that at some point in time we made a 
decision that probably the most important thing they could own, 
which is the health care system, the hospitals that we practice 
in and we shut that off and said that they can no longer own 
them going forward, or if they wanted to expand they can't 
expand them and compete.
    When we talk about consolidation, if you are able to knock 
out all of your competitors and not let physicians build 
hospitals, not let physicians expand hospitals, what is going 
to happen? We are going to see more consolidation in the 
hospital market, which is going to drive up costs, and we know 
from all the data physician-owned hospitals provide at least, 
if not better quality of care and they do it at a lower cost. 
It just makes sense to get rid of that ban.
    Mr. Burgess. Yeah. It absolutely does, and it is baffling 
to me during the coronavirus pandemic down in South Texas, 
Doctors Hospital Renaissance was unable to expand, even though 
they were the primary place that was taking care of the massive 
numbers of coronavirus patients.
    And I do wonder, Dr. White, why CBO has not recognized 
this, what Dr. Bruggeman just said?
    Dr. White. Thank you for the question. So on physician-
owned hospitals we recognize there is potentially a price 
competition effect with the incumbent hospitals.
    At the same time, if physician-owned hospitals are allowed 
to open new facilities or expand existing facilities we expect 
that that would increase utilization and in a sense that is the 
flip side of the access. I mean----
    Mr. Burgess. Well, let me just stop you there. You expect, 
but can you provide us the data? Can you provide us the models 
that you have used to make those assumptions? Because I think 
they are fundamentally wrong, and I would be happy to debate 
that with facts, but not what we expect will happen. I would 
like to see actual numbers on that.
    Mr. Chairman, thank you for your indulgence. I will yield 
back. I will have a number of questions I will submit for 
writing. Thank you.
    Chairman Arrington. I thank the gentleman from Texas.
    I now yield to my friend from Michigan, Mr. Dan Kildee, for 
five minutes.
    Mr. Kildee. Thank you, Mr. Chairman, and thank you 
especially to the witnesses for being here and for this really 
important conversation. You are bringing to light, I think, 
many of the challenges that we face, and it is hopeful, or we 
are hopeful that we are going to be able to address these.
    People in Washington do tend to talk a pretty good game. I 
think it is more important that we try to roll up our sleeves 
and get things done. We did that in the last Congress. There is 
a specific area that I would like to focus on.
    We delivered on a commitment to do what we can to try to 
lower costs for Americans when it comes to their health care. 
Last Congress under Democratic leadership we passed the 
Inflation Reduction Act, a landmark legislation that included 
legislation that I had a hand in drafting to cap the price, the 
out-of-pocket price of insulin at $35 a month.
    It was originally intended for everyone, but then in this 
legislation it applied to seniors and allowed Medicare also at 
the same time to negotiate drug prices with pharmaceutical 
companies. We got that done in the last Congress. As a result, 
Medicare beneficiaries are saving quite literally hundreds of 
dollars a month on insulin, something that is necessary to keep 
them alive.
    And once negotiated prices for the highest cost drugs go 
into effect, seniors who rely on those drugs will also see 
their savings grow. So for the seniors that I represent back 
home, especially those that rely on Social Security and 
Medicare to get by, that makes a real difference in their 
lives.
    Unfortunately, you know, there is some effort to go in the 
opposite direction. The Republican Study Committee, as I am 
sure most of the Members on this Committee know, have put 
forward a plan to repeal those drug pricing provisions.
    Obviously, our goal is to increase access to care, increase 
the quality of care, increase outcomes, and at the same time 
manage costs in a way that make it more affordable for 
Americans.
    So, Ms. Tripoli, I wonder if you might offer some thoughts 
on what the repeal of those very important provisions might 
mean specifically to Americans who are living paycheck to 
paycheck but also to our health care system writ large?
    Ms. Tripoli. Thank you very much for the question. I think 
repealing the Inflation Reduction Act or any of the suggested 
cuts to some of our most critical health insurance 
infrastructure in the country would have catastrophic effects 
for not only the affordability of care, which is the number one 
access issue that not just seniors but all Americans face right 
now in accessing their health care, but it would also have 
significant impacts on people's quality of life.
    We know that when health insurance is cut from people 
mortality goes up, and in terms of the Inflation Reduction Act 
in particular, as you laid out, there are really significant 
cost-savings mechanisms both to patients and the system.
    And if we want to get at the root of what is driving our 
Nation's health care affordability crisis, it is not a solution 
of cutting back on access to care. It is a solution of getting 
at the root cause which is prices.
    We have much higher unit prices for health care and drugs 
than anywhere else in the world, and it is so tightly tied to 
consolidation and the impact of consolidation on those prices.
    So real solutions that want to take on health care 
affordability should be focused on the root of the problem.
    Mr. Kildee. Well, I appreciate that very much, and, you 
know, obviously, we have got work to do dealing with some of 
these structural challenges.
    I hear from the physicians that I know as friends and that 
I see back home, a real concern that, you know, Doctor, you 
raised about the economic pressures essentially forcing 
physicians to make decisions that they otherwise would not 
make. So I appreciate that perspective.
    My point in my question is that while we do need to deal 
with these larger structural questions, there are things we can 
do that minimize the out-of-pocket costs for everyday 
Americans. We ought to be willing to pursue that.
    I know I saw one of my physicians this morning. I had my 
pupils dilated, and so I do appreciate the fact that you are 
all wearing these bright orange jackets this morning and the 
green hair really sets it off, so thank you very much.
    I yield back.
    Chairman Arrington. For the record, we will be the ones 
wearing the orange jackets by the time this is due.
    I thank the gentleman from Michigan, and now yield to my 
friend from North Carolina, Chuck Edwards, for five minutes.
    Mr. Edwards. Thank you, thank you, Mr. Chair.
    Dr. White, the National Council on Compensation Insurance 
found that hospital mergers can lead to operating cost 
reductions and lower patient costs for acquired hospitals of 15 
percent to 30 percent due to an improved integration of care 
and a reduction in duplicated clinical services.
    And that is exactly what I and the folks in Western North 
Carolina were promised in 2019 when the largest health care 
conglomerate in our district, in my district, merged with 
another hospital. However, that couldn't be further from 
reality for the citizens of Western North Carolina.
    After the merger, prices shot up at the newly owned 
facility and were higher than the average list prices of the 11 
neighboring hospitals and annual markup prices now average 
about 33 percent more every year.
    Based on your expertise, can you explain why that might 
have become the case?
    Dr. White. My understanding of the situation is that 
private insurers are negotiating prices with hospitals and the 
more hospitals consolidate, the more they lock down market 
share, and the more they turn themselves into must-have 
systems, the more insurers are at their mercy and are more or 
less compelled to include the hospitals in their network, even 
if it is at a very high negotiated price.
    So I think that is the broader dynamic that the situation 
you are talking about illustrates.
    Mr. Edwards. Thank you for that.
    Dr. Ippolito, did I get that close to right? Beyond the 
fiscal repercussions of health care mergers and monopolies, the 
citizens in my district have begun grappling with equally 
valuable but less easily quantifiable impacts of consolidation 
in regards to lower quality of care.
    While this metric can't be measured in dollar signs, it 
does have an equally tangible and important impact on the 
health care and quality of life for citizens in Western North 
Carolina. How would you recommend that we quantify quality of 
care?
    Dr. Ippolito. Well, that is admittedly much more 
challenging to do than cost but there has been a large 
literature, a large empirical literature, that has tried to do 
this, and they focus on a whole bunch of outcomes, mortality, 
but other much more less severe outcomes.
    And generally what you see is it is very, very hard to find 
compelling evidence that there has been a commensurate increase 
in quality that accompanies the increase in cost that we 
clearly see, and so while it is difficult to measure, the 
totality of evidence suggests that there is not clear evidence 
that it has improved.
    Mr. Edwards. So with your expertise, what do you view to be 
the most concerning non-monetary outcomes of health care 
consolidation?
    Dr. Ippolito. Well, I suppose if I had to rank order, 
mortality probably would be at the top. You know, it depends on 
the circumstances. It is kind of hard to say in general, but 
cost and mortality are the first things I would look at. Beyond 
that questions about access certainly come to mind, too.
    Mr. Edwards. So do you have any advice for how would you 
recommend that this Budget Committee and Congress leverage our 
resources to reduce these less tangible negative outcomes 
caused by consolidation?
    Dr. Ippolito. Well, the Federal Government, generally 
speaking, Congress specifically, has more ability to amend or 
change the public programs they have oversight over, and so I 
would start by focusing on every one of those program features 
that encourages greater consolidation and try to cut those off 
the best you can, site-neutral payments, 340B program, 
administrative burdens in the MIPs programs, things like that. 
That is where I would start.
    Mr. Edwards. All right. Thank you. Thank you all.
    Mr. Chairman, I yield back.
    Chairman Arrington. I thank the gentleman, and I now yield 
to my friend from California, Mr. Scott Peters, for five 
minutes.
    Mr. Peters. Thank you, Mr. Chairman, and thanks to all the 
witnesses for coming. As you have highlighted for the Committee 
today, the United States health care system has become 
increasingly consolidated with respect to insurers, physician 
services, and the hospital sector.
    For patients in San Diego and across the United States, 
consolidation and vertical integration often lead to higher 
costs and less price transparency, which we know is a really 
important aspect of competition in markets that are 
functioning.
    Facility benefit managers, or PBMs, for instance, talk 
about their ability to negotiate lower prices for patients, but 
too frequently PBMs pocket these discounts and they never make 
it to the patient.
    Ms. Tripoli, many PBMs, including the three largest, have 
vertically integrated with major health insurers. Why do you 
believe companies do this? What advantages do you think they 
see in consolidating?
    Ms. Tripoli. So part of, I think what PBMs are responding 
to is the significant consolidation there among drug companies 
and drug manufacturers. They are consolidating market power so 
that they can negotiate better prices and financial incentives 
for their own business practices.
    So I think in general the PBM pricing structure is very 
opaque, and as you have laid out, the incentive for them to 
negotiate lower prices is very, very minimal.
    Mr. Peters. Right.
    Ms. Tripoli. So driving more transparency around PBM 
pricing structures would be an important step for this 
Committee to consider.
    Mr. Peters. So thank you. I did support legislation like 
the bipartisan Lower Costs, More Transparency Act, which passed 
the House late last year, that contained rigorous reporting 
requirements for PBMs to prevent them from profiteering off 
state Medicaid programs and will help people understand better 
how they are directly increasing drug costs for patients.
    But I have some other ideas before the Energy and Commerce 
Committee about how we can keep working on PBM reform. I co-
lead a bill with Congressmember Miller-Meeks that would ensure 
PBMs pass their discounts along to patients with chronic 
conditions.
    Ms. Tripoli, how should Congress keep working to prevent 
PBMs from taking massive profits at the expense of patients, 
pharmacists, and our health care system? What else would you 
like to see us do?
    Ms. Tripoli. So in addition to transparency, increased 
transparency across the PBM pricing structure, which is really 
key, we need a lot more data to understand what the negotiated 
rates are, what the list price, what their list prices are.
    It is, I would say there are opportunities for addressing 
spread pricing and ensuring that the rebates going back to 
consumers is a key piece. Yes, absolutely.
    Mr. Peters. Great. If the rebates go back to the people who 
need them, right?
    Ms. Tripoli. That is exactly right.
    Mr. Peters. Mr. Chairman, I want to just say two words 
about the context of this hearing, too, because, you know, 
there are a couple of things that drive this discussion that we 
don't talk about.
    One is the way we account for costs, which is this year's 
money. Imagine a family where the parents come back and they 
say we could save this family $10,000 by not fixing the roof, 
and then the first rain comes next year and you spend $30,000 
on replacing the furniture.
    And that is the way we budget here. We look at this year's 
money. We give no credit for what today's investments might 
save us down the line.
    I want to thank Dr. White for his work in talking about the 
Baby Bear Project, which I will just introduce you to.
    Rady Children's Institute for Genomic Medicine conducted a 
study on infants where they did whole genome sequencing for 
infants hospitalized in intensive care, 178 critically ill 
babies at five hospitals across the state.
    They were sequenced to diagnose and guide personalized care 
which resulted in shorter hospital stays, fewer unnecessary 
procedures, and better outcomes for the children with their 
family. Saved $2.5 million in medical costs before you ever 
talked about lost earnings and all the things that would have 
happened had these kids not been fixed.
    This system is resistant to the benefits of innovation in 
terms of lowering costs, and I think we have to be aware of 
that, and we have to think about what the innovations that are 
coming out today at a very rapid pace, how they could be 
deployed today and how we gauge the benefits in the future, and 
that is something that we have talked about with CBO, but we 
have never really got there, and I think it would be really 
useful and more realistic in terms of controlling costs.
    The other thing is I want to say we are still talking not 
about a health care system but a sick response system. We 
respond to people being sick.
    If you look at the difference in childhood obesity between 
now and the 1970s, it is staggering. It is the difference 
between five percent and 30 percent. This is going to cost us a 
lot of money and we need to look not just at how we respond to 
these sicknesses but how we prevent them.
    Whether that is the food supply system or whether that is 
the level of physical activity that kids get, that is a huge 
impact on these costs as well and it actually drives a lot of 
it. I think we ought to be looking at that as well.
    Maybe a commission, Mr. Chairman, on dealing with these 
issues in a large way would be constructive, and I would just 
offer that again because we don't seem to do it here. I yield 
back.
    Chairman Arrington. I would agree with the gentleman and 
also say to my friend who mentioned a lack of logic between 
what we spend on the leaky roof versus when it collapses and 
the Preventive Health Savings Act that we passed on a 
bipartisan basis out of this Committee is one way to address 
that, whereby the gains may be outside of the 10-year window 
but it may be significant, and we need to flex on that, not 
just use this sort of cookie-cutter for everything.
    Mr. Peters. Mr. Chairman, if I might?
    Chairman Arrington. Yeah, please.
    Mr. Peters. Just to reemphasize----
    Chairman Arrington. Please.
    Mr. Peters [continuing]. The Baby Bear Project did that all 
within a window within a year and a half. So just we are not 
even talking about long, long term.
    Chairman Arrington. Yeah.
    Mr. Peters. There are a lot of savings we can get now. 
Thank you.
    Chairman Arrington. Yeah, I agree. I agree on both points.
    Now, we will yield five minutes to Mr. Ralph Norman from 
the Palmetto State.
    Mr. Norman. Thank you, Mr. Chair, and I would like to thank 
all the participants today.
    Dr. Bruggeman, on a bigger scale, I think you all are, the 
physicians in the trenches are in a great spot to really make 
some changes, but it is going to take a lot of involvement.
    I think in a lot of cases, and I know in South Carolina I 
have told many of my friends in the medical field if--and I 
have been in on the development end then once I got in politics 
I saw what doctors went through from the political end, we are 
not putting the right people in office that will advocate for 
you.
    Everybody, when you are on the backside of the curtain 
listening, you all make $20 million a year, you drive expensive 
cars and live in 15,000-square-foot houses. Now, you need to--
at the bottom we can talk consolidation. We can talk things we 
are going to do, but it is going to take a massive change and 
you all are going to have to lead the way because you know 
exactly what needs to be done.
    In my world if I have a problem with a building I go to my 
carpenters that built it. You are the carpenters and so I would 
just urge more of your colleagues to get involved, and I know 
they are busy but at least have their staff because we didn't 
hear from the medical profession, so many things, and you all 
in such a good way can make a difference.
    This medical field is on a collision course. We can't 
afford it. The PBMs, we did two hearings on it, they are not 
going to give up their vagueness or their trying to decipher, 
you know, what the cost is. It is impossible, and they 
negotiate. They make huge money and just to get around the 
edges and find out what they are doing is almost impossible, 
but it is going to take you all helping us out to say, like, on 
the regulations that you are talking about in your world, tell 
us specifically what you need us to do in a priority list.
    You got people like Jodey and others who will tackle that, 
but it is going to have to come from you all.
    On the uncompensated care, the billions, I think in 2017 
and 2018 it was over $40 billion for uncompensated care. That 
is on a collision course because that can't be sustained, 
particularly with the 15 million that are now in this country 
that are going to be in the emergency rooms, as was the other 
day when one of my staffers went. They couldn't get in because 
it was flooded.
    PBMs, what is your advice on trying to get the PBM crisis 
or, I guess, peeled onion back to find out what is actually 
going on?
    Dr. Bruggeman. Well, as an orthopaedic surgeon I don't deal 
with PBMs on a regular basis.
    Mr. Norman. Right.
    Dr. Bruggeman. I think there are some other experts on this 
panel that can probably answer that question better than I can.
    Mr. Norman. Yeah, Dr. Ippolito.
    Dr. Ippolito. You know, one of the ideas that came up 
earlier I think that probably would help is try to make sure 
that money that is supposed to be in some way ending up in the 
patients' sort of pocket actually gets there, and so I think 
one of the things you can do is try and get away from the 
current pricing system where we have really high list prices 
but where the insurer pays much, much lower net prices and the 
only person paying that list price is the patient paying out-
of-pocket. It seems to me that is one of the big frictions and, 
frankly, bad features that PBMs seem to help facilitate that. 
That would be a step in the right direction.
    Mr. Norman. Yeah. You can't understand it and that is for a 
reason, and they promote the candidates that get elected who 
are going to leave it like that because it is a tremendous.
    Any other comments?
    Ms. Tripoli. No. I mean, I think the only thing to just add 
is there is a bit of an, you know, I think when we are looking 
at drugs we have to remember that, like, drug companies, drug 
pricings are mostly driven by drug companies, but PBMs, of 
course, have a role to play but there is the broken financial 
incentive in the PBM pricing structure which is why we need 
more transparency.
    They are financially incentivized to negotiate higher cost 
drugs onto the formularies because their revenue is based off a 
percentage of the rebates. So I think we want to--transparency 
is a really important piece to just pull back the curtain, as 
you suggested, and get underneath the hood, understand what is 
going on. Get more information, more data about the pricing 
structures so that we can have a much more effective targeted 
policy solution.
    Mr. Norman. I know one of the quickest ways we could make a 
dent in the health care controlling the price, put us on that 
plan. Let's put Members of Congress on and see how quickly it 
gets solved, because the VA has--I mean, veterans get some of 
the poorest care. They ought to be getting the superb care.
    So put us on the plan and I think maybe we ought to put a 
bill out that we do that. I want to thank each one of you for 
comment, and I yield back the balance of my ten seconds.
    Chairman Arrington. I would like to get that ten seconds 
back. That is first time I think that has ever happened. Mr. 
Norman, thank you for your input.
    Jimmy Panetta, five minutes for my friend from California.
    Mr. Panetta. Thank you, Mr. Chairman, appreciate it, and 
thanks for having this hearing, something that is so relevant 
to my congressional district out there on the Central Coast of 
California in the 19th Congressional District.
    So thank you to the witnesses for being here. It really has 
kind of reached a breaking point when it comes to health care 
in my district. I have got providers leaving the market and I 
have got patients unable to count on timely access to care.
    I think the thing that we can all agree on, patients and 
providers and Democrats and Republicans, as you are hearing, 
and my constituents and my colleagues here is that Medicare 
payments kind of are making the problem worse. The number one 
thing I hear in my district from providers and patients is that 
Medicare is just out of reach.
    Primary care providers are no longer accepting new Part B 
patients and specialists don't earn enough from Medicare to 
keep their practices open, let alone expand. This is all part 
of a bigger issue, as we have been discussing here, is the 
failure of Medicare rates to keep up with the cost of care.
    Now, I was proud to work across the aisle this last 
December with Congressman Greg Murphy from North Carolina on 
the Preserving Seniors' Access to Physicians Act, H.R. 6683, a 
bill that would offset the nearly 3.4 percent cut to providers 
in 2024.
    Now, we managed to get about halfway there in the final 
Fiscal Year 2024 appropriations package, but that still meant 
that doctors who treat my constituents saw another pay cut, 
payment cut. According to the California Medical Association, 
when we factor in inflation doctors will experience an 
effective six percent cut in 2024.
    Now, I know all of you, especially Dr. Bruggeman, it is 
clear that low Medicare Part B rates impact physician practices 
with consolidation, difficulty retaining staff, and, yes, 
trouble keeping the doors open amid rising costs. But if you 
could, Dr. Bruggeman, what should Congress be doing for this--
any long-term sustainability in Medicare Part B?
    Dr. Bruggeman. Yeah. I mean I think there are a lot of 
different issues at play. We have heard a lot of discussion 
about PBMs and potential savings there. We have heard 
discussion about site-neutrality and potential savings there.
    I just would encourage that those dollars go into restoring 
Part B payments to physicians to normal inflationary increases. 
There is just nobody who would stay in business if they made 
less money compared to inflation every year, and we have got to 
find a way to increase physician payment as it relates to 
inflation and use some of the savings from some of these other 
concepts to help pay for that.
    Keep some of the savings but use some of the savings to 
ultimately help pay for those physicians to stay into practice 
and stop consolidating, which is ultimately costing us a lot 
more money.
    Mr. Panetta. Yeah.
    Dr. White, is there anything else that you would add to 
that or anything different from that?
    Dr. White. Our sense is that the relatively low growth in 
Medicare physician fees is one factor and the uncertainty from 
year to year is one factor in providers thinking about 
independent practice versus being part of a system.
    But I would just go back to say that there are many factors 
other than just the fees. There is the desire for negotiating 
leverage from being part of a larger system. There are 
administrative burdens from MIPs. There is 340B. There are a 
number of factors.
    The other thing I want to highlight in the spirit of 
managing expectations is from the Federal budgetary 
perspective. If the fees paid to independent physicians are 
increased, we would definitely look at, is that going to keep 
more physicians in independent practice, slow the rate of 
consolidation?
    We would look at that closely, but I expect that by far the 
dominant effect on the budget would just be the direct increase 
in fees and Medicare outlays as a result.
    Mr. Panetta. Yeah, understood.
    Now, Dr. Bruggeman, you talked about tying in inflation, 
and obviously that goes back to the Ranking Member's comment 
about the Medicare Economic Index in which I think, what this 
March, MedPAC also called for indexing Medicare Part B to 
inflation and said Congress should finally raise physician care 
payments for calendar year 2025.
    The biggest obstacle to this effort is, as Dr. White just 
kind of talked about, is cost. It costs more money to pay 
providers what their services are really worth, and when we 
underpay them they go out of business or they just sell their 
practice.
    Dr. Ippolito, in 30 seconds, can you discuss how indexing 
would impact physician practices?
    Dr. Ippolito. Well, my expectation is that if you were to 
index payments to at least match inflation that you would 
likely increase participation in the program and likely on the 
margin increase the number of independent practitioners. I 
don't have a great sense of what the exact magnitude is but 
those would be my initial sense.
    Mr. Panetta. Great. Thanks again to all the witnesses. I 
appreciate you highlighting not just the issues, but actually 
bringing solutions to the table that hopefully we should be 
able to work on in a bipartisan fashion.
    Thank you. I yield back, Mr. Chairman.
    Mr. Carter [presiding]. The gentleman yields.
    The Chair now recognizes himself for five minutes for 
questioning.
    I thank all of you for being here. I am so excited. This is 
the most excited I have been for a hearing in years, in fact, 
in ten years since I have been a Member of Congress. As many of 
you know, I am a pharmacist.
    As many of you know, I am the one who had to go to the 
counter and tell the patient how much their prescription was. I 
was the one who had to watch a senior citizen make a decision 
between buying their medicine and buying their groceries. I was 
the one who saw the mother in tears trying to figure out how 
she was going to pay for the antibiotic for her child.
    And I wanted to do something about that, and I have worked 
in the Georgia state legislature and I have worked here in 
Congress for the past ten years to try to do something about 
that.
    I am so excited to hear that everyone at least knows what a 
PBM is now. When I came here ten years ago I would say PBM and 
people would look at me like I had a third eye. Well, that has 
changed now, and it is not just--and I really want to 
compliment the Chairman for calling this hearing and for the 
bipartisanship that you see here because as Representative 
Kildee said earlier, we all want the same thing. We want 
accessibility, affordability, and quality in health care.
    People on this side of the aisle, people on that side, 
everyone, everyone in this room. We want that, and we will make 
sure we get it, and it is not just in pharmacy. Yes, it is in 
drug pricing where you see where the insurance company owns the 
PBM that owns the group purchasing organization that owns the 
pharmacy that owns the doctor.
    Do you know who the largest employer of doctors is here in 
America now? UnitedHealthcare. Almost ten percent of all 
physicians in America work for UnitedHealthcare. I am just so 
excited to hear this.
    Dr. White, I want to start with you. We had a hearing--
excuse me, we had a Member Meeting of Energy and Commerce and 
we had the Director of CBO with us and we had about 20 of your 
staff members here and I asked this question, and I am going to 
ask you the same thing. Give me one example of where 
consolidation in health care has saved money.
    Dr. White. I can't think of one.
    Mr. Carter. Thank you very much for that.
    Dr. Bruggeman, I described how the insurance company owns 
and the vertical integration that exists, and we see it. Again, 
we see it in prescriptions and drugs, but we see it all 
throughout health care, and this is the biggest problem that we 
have got.
    Do you believe it is a conflict of interest for the 
insurance company to own the pharmacy, to own the PBM?
    Dr. Bruggeman. Yes.
    Mr. Carter. The vertical integration incentivizes the PBMs 
and its plans, not only that but it steers patients. Have you 
seen any example of patients being steered by the insurance 
companies? Any of you?
    Dr. Bruggeman. Yes. I mean, we certainly see that these 
insurance carriers will then steer it towards their own 
employed physicians or their surgery centers by providing 
financial incentives.
    Mr. Carter. All right, let's shift gears for a second.
    Dr. Ippolito, I am sorry, I know I butchered that, but 
nevertheless, 340B. You know, look, the 340B program is a good 
program. It was intended for the FQHCs. It was intended for 
those who need this program.
    It has evolved into something that it was never intended 
for, and the current structure of 340B, and have you seen it, 
Dr. Bruggeman or Dr. Ippolito? Have you seen where some of 
these health care systems are buying out practices for no other 
reason except to get the 340B pricing?
    Dr. Ippolito. Yes. I have certainly heard the anecdotes, 
but I have also seen research that suggests that specialties 
that prescribe lots of relevant medications that you get for 
340B prices have been acquired by hospital systems specifically 
in keeping with that hypothesis. Yeah.
    Mr. Carter. And, you know, as the Chairman pointed out 
earlier, it is innate in all of us, particularly in capitalism, 
and look, I am not opposed to anybody making money. I get it. 
We live in a capitalistic society, and I understand that and it 
is innate in wanting to make a profit and wanting to get the 
lowest price you can, but this is not being passed on to the 
patient.
    Ms. Tripoli, you said earlier about transparency, 
particularly as it relates to PBMs, and making sure that the 
employer, the plan sponsor sees the discounts that are being 
given and sees where they are going and that the patient gets 
that discount. The patient receives it. Is that something you 
think would help?
    Ms. Tripoli. Absolutely.
    Mr. Carter. Good.
    One last thing, Dr. Ippolito, can you expand on the impact 
of consolidation on drug prices within the 340B hospital system 
and any negative impacts on the availability of provider 
services?
    Right now there is a study being done by the FTC that 
finally, I had requested it the first time I got up here, 
finally they undertook a study about two years ago, a 6B study, 
to see the impact that PBMs are having on independent retail 
pharmacy, which is impacting affordability and accessibility. 
Do you see this with the 340B program?
    Dr. Ippolito. At a minimum I think it is fair to say the 
340B program is perhaps not as targeted towards the types of 
care that it is supposed to be targeted towards. Hospitals 
certainly made quite a bit of money on it. It doesn't seem like 
there is a lot of evidence that that is translating to the kind 
of care that you are referring to.
    Mr. Carter. Well, I don't want to abuse my time in the 
Chair and go past my allotted time, but I want to thank you all 
for being here, and I want to thank the Chair especially for 
this hearing. I have not been as excited about a hearing since 
I have been a Member of Congress in ten years.
    Folks, this is serious. This is a problem, and again, the 
bipartisanship you see here, everyone wants the same thing. We 
want affordable, accessible, quality health care. That is all 
we want.
    I will yield back.
    And at this time the Chair recognizes Representative Balint 
from Vermont for five minutes of questioning.
    Ms. Balint. Thank you, Mr. Chair, and thank you to all the 
witnesses for coming today. As others have said, this is a 
really important topic to all of us.
    I thought I would just start by naming the elephant in the 
room. The United States is the only industrialized nation in 
the world that doesn't guarantee access to health care.
    And we have heard for years now many Americans have to 
decide between refilling their prescriptions, putting food on 
the table, and making other cuts in their budgets. They delay 
annual checkups and preventative health care visits and 
ultimately this costs the system more money in the long term 
and we get worse health outcomes.
    So I think any discussion about our health care system, 
which is, in fact, not a system, it is something that has been 
cobbled together horribly with duct tape and twine over 
decades, is not a system, and it is not serving Americans well.
    That is one of the reasons why I can't have a conversation 
about this without naming that we should have Medicare for all. 
Full stop. Everyone in this country, regardless of ZIP Code, 
should be able to get the health care that they need and we 
should finally put patients, finally, at the center of the 
equation.
    You know, we talk a lot about trying to find solutions and, 
in fact, we have had some wins and they have not fixed the 
system but they certainly have made things better.
    I just want to remind folks, and I don't want to go down a 
horribly partisan path here, but I just want to remind folks 
that many of my colleagues have tried to repeal Obamacare 
between 60 and 70 times. Between 60 and 70 times. The amount of 
time that was wasted trying to repeal something that was 
actually working to get more Americans health insurance, and I 
think we need to remember that because we all have a part in 
solving the problem. So let's not pretend that that didn't 
happen.
    Now, we also recently passed the Inflation Reduction Act, 
which from my count, not a single Republican voted for that, 
and again, it was to lower health care costs. It was to lower 
drug costs.
    So again, let's not forget that we have had opportunities 
before us to come together and, in fact, in those situations 
politics took the front seat over actually coming together to 
do some work on behalf of Americans.
    So that being said, Ms. Tripoli, I am so glad that you are 
here. I want to focus on an issue that is really concerning me 
in Vermont, and it is how private interests are playing into 
our system to treat opioids.
    Like many of my colleagues here on both sides of the aisle, 
we are dealing with a terrible fentanyl crisis, and according 
to a report from STAT News, ``Private equity firms have 
acquired stakes in nearly one-third of all methadone clinics in 
recent years,'' and in Vermont we only have six opioid 
treatment centers and the majority are backed by private equity 
companies.
    Ms. Tripoli, could you speak about the negative 
consequences of private equity stakes in health care providers? 
And specifically in the realm of behavioral health care, that 
sector, because we have an incredible need. We are not meeting 
the needs of patients in Vermont.
    Ms. Tripoli. Absolutely. Thank you for the question. I 
think we have to be extremely skeptical of the role of private 
equity in health care. Fundamentally, there is an 
incompatibility with a private equity business model and 
securing the health and financial security and well-being of 
the American people. By design the business model is you come 
in, you buy up a practice, you buy up a community-based 
provider, and you are trying to cut costs. You want to look 
more profitable in it, right?
    And so we see service lines being cut. So we see people 
losing access to care. We see an incredible increase in poor 
outcomes related to more increased falls, higher hospital-
acquired infections, et cetera.
    So we see access reduced. We see quality going down, and 
sometimes the land that the private equity firms are actually 
buying up is more profitable than the practice itself and so 
they close it down altogether. So it has----
    Ms. Balint. Can you say that again?
    Ms. Tripoli. Sometimes----
    Ms. Balint. Say that again.
    Ms. Tripoli. Sometimes the land, oftentimes the land that 
the provider is sitting on that the private equity firm has 
bought is more profitable than providing the care in that 
community and so they close the facility down completely so 
that they can sell the land.
    And so, of course, that has catastrophic impacts for access 
to affordable, quality health care for all health care services 
in the community and, in particular, for people who need 
behavioral health services when we are in the midst of a 
behavioral health crisis in our country.
    Ms. Balint. I really appreciate that. I thank you so much 
for being here, and all the witnesses.
    And the last thing I want to say is health care should 
include mental health care. It should include behavioral health 
care. The body does not stop at the neck. Thank you.
    Mr. Carter. The gentlelady yields.
    The Chair now recognizes the gentleman from California, 
Representative McClintock, for five minutes of questioning.
    Mr. McClintock. Thank you, Mr. Chair.
    First, one of my colleagues advocates Medicare for all. I 
would remind her that people spend a lifetime paying into that 
system before they qualify, and even so they will end up 
drawing about three times more out of the system than they pay 
in, which is why the actuaries are warning us that that system 
is in imminent danger of collapse, and I can't think of 
anything that would collapse that system faster with all of the 
elderly people who depend upon it than what the gentlelady has 
just advocated here. The State of California, which is the most 
radical-left state in the country, has several times considered 
providing a Medicare for all at the state level and blanched at 
that at the price.
    Dr. Ippolito, the two sectors of the economy where prices 
have increased much faster than inflation are tuition and 
health care. Why is that?
    Dr. Ippolito. Well, you know, I am not an education 
economist, but there are certainly some similarities. Among 
other things they are fairly heavily federally subsidized, 
which lowers the costs.
    Mr. McClintock. We pour tons of money into it and they are 
happy to accept it. Is that essentially what is going on?
    Dr. Ippolito. I think one could characterize that as a 
factor, yeah.
    Mr. McClintock. Let me read you something that Milton 
Friedman wrote 23 years ago. He said, ``Since the end of World 
War II, the provision of medical care in the United States and 
other advanced countries has displayed three major features. 
First, rapid advances in the science of medicine; second, large 
increases in spending, both in terms of inflation-adjusted 
dollars per person and the fraction of national income spent on 
medical care; and third, rising dissatisfaction with the 
delivery of medical care on the part of both consumers of 
medical care and physicians and other suppliers of medical 
care.''
    Have things gotten better or worse since he wrote that in 
2001?
    Dr. Ippolito. It would be a tough case to say it has gotten 
much better. We have had many advances, many technological 
advances, but----
    Mr. McClintock. In the technology, but as Milton Friedman 
also pointed out, ``In every other sector as technology 
advances prices go down.'' Has that been the case here?
    Dr. Ippolito. No, not in general.
    Mr. McClintock. So spending has gotten higher, 
dissatisfaction with the system has obviously gotten greater. 
If that is the case, despite massive increases in government 
spending and regulation, maybe that is what is causing it. All 
this government intervention and spending that has made costs 
higher and services worse. That shouldn't surprise us. That is 
what socialism always produces, higher costs and worse 
services.
    Let me ask you this. What role does illegal immigration 
play in driving up health care costs?
    Dr. Ippolito. You know, I am not an expert on this issue 
but the key things that you would have to think about are what 
kind of resource use do you see among that population and how 
much does that cost?
    Mr. McClintock. Well, let me tell you what they are because 
the Federation for American Immigration Reform just released a 
report on that. We had a hearing on it just a week or so ago, 
estimating the cost of care for illegals is about $22 billion a 
year. Who ends up paying that $22 billion price tag?
    Dr. Ippolito. Well, some combination of the people who 
receive services, the Medicaid program potentially, and then 
providers and the Federal Government in the form of 
uncompensated care.
    Mr. McClintock. Before we socialized our medical system we 
had a free market system which every American could choose from 
a wide variety of competing options, the one that best met 
their own needs and budget.
    They owned these policies. They could change them at will 
if they became dissatisfied with their coverage, and they had a 
huge incentive to live healthier lives.
    For example, an obese smoker paid higher premiums than 
someone who kept himself healthy. An elderly couple wasn't 
forced to pay for maternity care. A young family could choose 
to purchase low-cost catastrophic insurance and then pay for 
incidental expenses out-of-pocket.
    So explain to me why we shouldn't just start over, scrap 
this entire mess of a system, allow people to deduct their 
health costs from their taxes, provide the poor with a minimum 
subsidy to assure that every family can afford at least a basic 
plan, allow consumers to shop across state lines, restore the 
freedom of people to choose the level of coverage that best 
meets their needs and budget that they can change anytime they 
become dissatisfied?
    Wouldn't we quickly return to a situation where we had a 
wide variety of plans and prices that consumers could choose, 
health care providers that are attentive to consumer demands in 
a highly competitive environment, and cost just a fraction of 
what we are paying today?
    Dr. Ippolito. There are certain features of that that I 
think would be a real step in the right direction. Focusing 
more on ensuring rare, very expensive things, I think, is a 
reasonable goal. There are trade-offs associated with that, but 
I think there are some reasonable points there.
    Mr. McClintock. Thank you. I see my time has expired.
    Mr. Carter. The gentleman yields.
    The Chair now recognizes the gentlelady from Minnesota, 
Representative Fischbach, for five minutes of questioning.
    Mrs. Fischbach. Thank you, Mr. Chairman.
    Most of the hospitals and nursing homes in my district have 
integrated with larger systems in one way or another and they 
mainly serve communities of fewer than 5,000 people. This helps 
to preserve access to health care in those communities.
    In fact, I have one facility in a town of just 700 people 
that is part of a large hospital system. It is a vital part of 
the community and the surrounding area. The impact of care that 
the facility provides extends for miles, and it exists solely 
because a larger company has the capability to support them.
    These hospitals are an extension of services provided at a 
larger hub, spreading their expertise to even the most remote 
parts of the state. The work that they do is vital.
    Additionally, with the rise in telehealth options, larger 
companies are in the best position to finance a cybersecurity 
system to protect patient information.
    I acknowledge that health care costs are high, but access 
to high-quality care, especially in rural communities like the 
ones I represent is critical. People living in rural 
communities should have access to health care.
    Is there a plan to preserve and enhance health care in 
rural areas? Rural communities deserve access to health care 
and the ability to benefit from the same medical advances that 
are developed in this country's top hospitals. We cannot 
suffocate innovation and we cannot hinder the care that is 
available to rural communities across the country.
    Overregulating the care of those with no other option is no 
way to cut costs. We need to develop policies that will help 
all of our hospitals thrive. We need to support American health 
care innovation and expand the reach of expertise to bring 
lifesaving care to folks who are far away from their nearest 
hospital, and before we go after one aspect of the health care 
system, we cannot overlook the issue of access of care 
especially to those rural areas.
    Would anyone like to address that issue? Have we looked at 
that? Have we talked about making sure that people in remote 
rural areas have access to care? Anyone who would like to 
respond?
    Ms. Tripoli. I will say, first of all, absolutely. Making 
sure that all people living in this country have access to high 
quality affordable care is paramount. I think the challenge 
with the rural community sometimes is the economics for those 
provider systems are different than those in more urban areas, 
and so I think that when we are talking about solving for those 
economics we need a very specific set of solutions for rural 
providers so that they can keep their doors open, they can be 
sustainable financially, and continue to serve the patients and 
their communities, continue to be a really important source of 
jobs. Having them close their doors is not ideal.
    At the same time, we do know that we have to correct some 
of these fundamental challenges in these financial incentives 
that are encouraging consolidation, and so it is not that it is 
all bad, but the vast majority of hospitals are responding to a 
financial incentive in the Medicare program that is encouraging 
to continue to consolidate.
    So we have to address that problem. It is hugely wasteful. 
It is shifting patients to higher cost care settings. It is 
driving up the cost of care for everybody. So it would be a 
both/and for us.
    Mrs. Fischbach. All right. Then whatever we do and when we 
talk about this we need to address those folks in rural areas 
because we are talking about these broad things and saying this 
is horrible, this is horrible, this is horrible, but those 
people not having health care, not having access to health 
care, and they are already driving hours for the most basic 
care.
    That is horrible. That is horrible and it is not right, and 
we need to make sure that we are addressing that, and that is 
one thing that I have not heard about today is we are not 
talking about access. We can talk about all of the other 
things, but when it boils down to it, it is about people having 
access to health care.
    If you have something to add?
    Ms. Tripoli. Yeah, I just want--I completely agree with 
you. Could not agree more. One of the things we can do when we 
are talking about site-neutral payments, because that is such a 
bipartisan solution here today that we have been talking about, 
is reinvest.
    There is about $150 billion to $160 billion in savings and 
some of that savings can be reinvested back into rural 
providers to make sure that they stay whole.
    Mrs. Fischbach. Well, these larger companies are the ones 
that are preserving access to my folks that live in rural areas 
and they are making sure that they have health care. So let's 
make sure that we recognize that also when we are having these 
discussions.
    I have seven seconds if you have something, Doctor?
    Dr. Bruggeman. I would just add that physician-owned 
hospitals are currently banned and there is nothing that says 
that physicians could not invest in their own communities and 
build those facilities that would provide the critical access, 
and we would definitely encourage expanding the rights to own 
your own facilities as a physician in those rural areas to 
continue to expand the access and care as well.
    Mrs. Fischbach. Thank you for that, but I just really--we 
need to recognize that it is about access, also, and that we 
cannot always just say this is how we cut costs because we have 
to recognize that rural people who live in rural areas need 
access.
    And with that, Mr. Chair, I yield back.
    Mr. Carter. The gentlelady yields back.
    The Chair now recognizes the gentleman from Wisconsin, 
Representative Grothman, for five minutes of questioning.
    Mr. Grothman. Thank you. Whenever I think about this topic 
I think about a physician friend of mine who told me that he 
felt medical care in this country peaked out about seven years 
ago. He attributed it in part to all these consolidations which 
makes medical care even more impersonal and profit-driven than 
it already would have been, plus the seeping of this DEI stuff 
both into the colleges and into the medical facilities 
themselves.
    In any event, whenever we talk about this topic one of the 
things that I think of is differences in how we treat people 
and how some procedures seem to be done more in one facility 
than in the other facility. Years ago they always used to talk 
about C-sections, the tremendous variance from doctor to doctor 
and hospital to hospital.
    Do you want to comment on that a little bit and give me 
some other examples where you feel procedures vary from 
hospital to hospital, system to system, part of the country to 
part of the country?
    Dr. Ippolito. I can speak generally to that in the sense 
that there is a longstanding empirical literature that looks at 
the Medicare program, fee-for-service, and what you see is that 
there is enormous variation across the country in both how much 
Medicare spends and in particular, utilization across the 
country.
    And it is clear that there are some areas that on specific 
services and more generally deliver much, much more care than 
other places. So it is clear that there is a lot of variation 
along these lines.
    Mr. Grothman. And by more care you mean more procedures?
    Dr. Ippolito. Exactly.
    Mr. Grothman. And do you think that, and I would assume 
that it is driven in part, it is profit-driven? The more you do 
the more you make?
    Dr. Ippolito. Yeah, particularly in the Medicare fee-for-
service program you can't increase price so what you can do is 
deliver more services.
    Mr. Grothman. Do more stuff. I think you were going to say 
something right there at the end?
    Ms. Tripoli. No, just generally agree with that comment.
    Mr. Grothman. Okay, next comment. I was looking here at 
what administrators make. I mean, it is just obscene, you know, 
compared to, I think, what they were making 20 years ago. 
Anybody want to comment? I am sure overall that it is a small 
cost of medical care, but when you see people making $10 
million, $20 million a year, you know, nobody should make that 
sort of money unless you, you know, discovered something or 
other that is saving lives, but anybody want to comment on the 
cost of what administrators make and what it is now compared to 
20 or 30 years ago?
    Dr. Bruggeman. I mean, I would certainly say that that is 
one of our biggest concerns, is that a lot of the dollars are 
being diverted that are being paid for in health care to the 
salaries of people who do not actually add to the bottom line, 
instead shifting the money towards the things that actually 
provide the people that provide the care and the things that 
provide the care.
    Mr. Grothman. Absolutely, baby, and when you get in these 
hospitals, do you know how much they spend in a hospital for 
people who never deal with a patient? Is there anybody with 
those statistics?
    I mean, not only do you have the overpriced administrators, 
which is criminal enough, but when you go into a hospital you 
see all sorts of hardworking people staring into their computer 
screens but have nothing whatsoever to do with medical care. Is 
that a problem do you think?
    Dr. Bruggeman. I would just tell you that right now in my 
own personal practice we--because of the regulatory 
requirements, over a third of my staff's time and money is 
spent purely on non-clinical work trying to respond to various 
regulatory burdens.
    Mr. Grothman. Okay. Does anybody want to comment on the 
effect--we recently had a major consolidation that affects the 
hospitals in Milwaukee and they, you know, were connected to 
some outfit down in the southeast. Does anyone want to comment 
in general on the effect these massive behemoths being formed, 
have both on the cost and also on the quality of care?
    Because I would think the more impersonal you are the more 
you are just worried about dollars and that sort of thing, and 
I know doctors hate them. Every doctor I know hates them.
    Anyone want to comment on them?
    Dr. Ippolito. I guess I could say that there has been 
research that looks into, you know, a lot of the focus is on 
when two very nearby hospitals merge and obviously that leads 
to higher prices and more administrative costs, things like 
that.
    There is also research that shows that even when these 
hospital systems merge and they are not next door to each 
other, you tend to see higher prices because still the 
employers have to negotiate in Madison and Milwaukee, and so 
the fact that the two hospitals in both those cities might be 
owned by the same entity ends up mattering quite a bit.
    Mr. Grothman. Okay. I want to come back to what you were 
referring to as utilization. Are you aware of anywhere where we 
can just get those statistics? I mean, the reason I say is I 
think they even do more surgeries than some physicians and 
others and whatnot and there is always a damage in surgeries. 
There is always a danger of getting infected or die or 
something or other.
    And I think the public would love to know if, you know, if 
I am going to a conglomeration or I am in a part of the world 
where they do way more whatevers than they do in Pennsylvania 
or something. Actually, I think it is the other way around. 
Probably do way more in Pennsylvania, but do you think it would 
help if that were more publicized and maybe some patients 
themselves that say, hey, I don't want to go into one of these 
killing factories, that is an author I like, killing factories, 
if I don't have to and how come we are doing so many of these 
things here but aren't doing them in----
    Dr. Ippolito. It potentially could, and I would be happy to 
send some of the evidence on that.
    Mr. Grothman. Wouldn't that be helpful? Because I think a 
lot of people don't like to go under the knife and they don't 
realize that their doc is just way out of whack with the rest 
of the country.
    You wanted to say something at the end there?
    Ms. Tripoli. Sure. I was just going to say that I think one 
of the things you are talking about is the predominant way that 
we reimburse for health care physician services in this country 
is fee-for-service, and those economics, fee-for-service 
economics, by design incentivize higher volume of higher cost 
service.
    Mr. Grothman. Exactly.
    Ms. Tripoli. So I think if we want to shift away from that 
we have to think about other----
    Mr. Grothman. Exactly.
    Ms. Tripoli [continuing]. Types of reimbursement structures 
that we can use that drive more towards affordable population 
health improvements.
    Mr. Grothman. Yeah, that is exactly right. The more you do 
the more you make, right? Isn't that kind of the problem? 
Absolutely.
    Thank you.
    Mr. Moore [presiding]. I appreciate the animation of the 
gentleman from Wisconsin. Got a new Chair up here. We are going 
to get this a little more lively. The gentleman from 
Wisconsin's time has expired.
    The Chair now recognizes the gentleman from Texas, Mr. Roy, 
for five minutes.
    Mr. Roy. I thank the gentleman from Utah.
    I appreciate all the witnesses. Dr. Bruggeman, it is great 
to have you here from San Antonio. I will be in San Antonio 
tomorrow to celebrate, hopefully, a new direct flight from DCA 
to San Antonio which makes it easier for people to get up here, 
which is great.
    But appreciate all your time. I have a couple things we 
haven't talked about in this hearing so far. One of them is the 
proposals for transparency, lower costs as a result of greater 
transparency.
    I think most people, I think on both sides of the aisle, 
would say transparency is probably good to improve. I think my 
question here, I guess, and I will start with you, Dr. 
Ippolito, is how much do we think that whether it is the Lower 
Costs, More Transparency bill or some product similar to it, 
will be able to make a sort of meaningful difference in 
lowering premiums, lowering deductibles, lowering the general 
cost of health care services absent more structural and 
fundamental reform?
    In other words, how much is that just, you know, I think I 
have said before, you know, patching the drywall with some mud 
and some tape, but not actually changing the foundational 
problems? Again, not to criticize any efforts there, but rather 
to say absent structural reform on who is buying and selling 
goods and services and consolidation, are we going to get a 
meaningful, significant drop in prices or modest drops in 
prices under some proposal like that?
    Dr. Ippolito. Yes. So one way to think about is two things 
can be true. It can be true that greater transparency, for 
example, into PBMs, might help employers pick plans better and 
save some money.
    It can also be true that what you are saying is, you know, 
if there is only one hospital in town the fact that you know 
their price now doesn't really change anything, and so, yes, we 
are more in the modest zone.
    Mr. Roy. And even talking about PBMs, for example, right, 
79 percent of prescription drug claims are processed by only 
three PBMs. Does that sound right to you?
    Dr. Ippolito. Yes it does.
    Mr. Roy. Is that good?
    Dr. Ippolito. It is probably not great.
    Mr. Roy. Yeah, I mean, I think this is what I am trying to 
get at is, like, we have largely, and I will opine here and you 
can agree or disagree, destroyed the market and competition.
    So when my colleagues on the other side of the aisle talk 
about, oh, the Wild, Wild West--I actually had a debate one 
time with a left-leaning progressive activist in Austin, Texas, 
and she described the Wild, Wild West of health care and talked 
about the Wild, Wild West prior to Obamacare and all that, and 
I am, like, if the alphabet soup of regulation is the Wild, 
Wild West, then I could see why you think that is a problem, 
but it is not free market. It is not free enterprise. It is not 
competition.
    Would you agree that there is a fundamental lack of 
competition to drive prices down? I mean, the gentlelady from 
Minnesota was talking about access and talking about, you know, 
well, we don't want to get too caught up on cutting costs or 
prices or whatever. If you don't get prices down can you have 
legitimate access to health care?
    Dr. Ippolito. First off, I agree with your conjecture that 
we really do not have a private--and we never really did--have 
a private system. We had a heavily regulated market.
    But it is one way to put it, it is extremely expensive to 
insure and expand access if you cannot do anything about prices 
that are currently paid.
    Mr. Roy. Dr. Bruggeman, how can we make it easier, and 
short answer because it is open-ended, but, like, just being 
very specific, how can we make it easier for you to cut 
insurance, other third parties, government out entirely so that 
you can run your business and practice?
    And one quick follow-up, you said something about no, there 
not being a ban on physician practices. There is a restriction 
post-Obamacare on future physician practices, right, as opposed 
to, you know, grandfathering out past physician practices. Is 
that correct?
    Dr. Bruggeman. There is both. The current ones cannot 
expand and new ones cannot be built for physician-owned 
hospitals.
    Mr. Roy. Right. Right.
    Dr. Bruggeman. I mean, the answer is, number one, give us a 
financial future. Show us a glimmer of hope for the future. 
Show us that we can get our pay tied to inflation.
    Number two, reduce our regulatory burdens and you have 
heard that across the table. There is too much regulatory 
burden currently so how do we get rid of that so that we can 
just focus our efforts and all of our money on providing care 
as opposed to all of this money that is currently being spent 
behind closed doors working on various regulatory efforts.
    Mr. Roy. Dr. Ippolito, just a couple of questions kind of 
on a rapid fire since I only have about a minute. Do these 
sound right to you roughly, that premiums have increased by 54 
percent since the passage of the Affordable Care Act, 
Obamacare?
    Dr. Ippolito. I wouldn't be surprised if that is correct.
    Mr. Roy. Do United, Anthem, and Humana receive a majority 
of their revenue from the Federal Government?
    Dr. Ippolito. That sounds plausible.
    Mr. Roy. To the best of your knowledge, is it correct that 
there were about a thousand hospital mergers between 2002 and 
2020?
    Dr. Ippolito. That sounds right.
    Mr. Roy. To the best of your knowledge, is it correct that 
10 percent of all physicians in America now work for an 
insurance company?
    Dr. Ippolito. Yep, that does.
    Mr. Roy. And growing?
    Dr. Ippolito. Yes.
    Mr. Roy. Do hospital prices after mergers generally go up 
one percent to two percent at least $500 rather than going down 
based on, you know, some cost savings from the merger?
    Dr. Ippolito. Yes. There is extensive evidence on that one.
    Mr. Roy. Is national health spending at an all-time high of 
about $4.5 trillion in 2022 and growing?
    Dr. Ippolito. Yep. That is correct.
    Mr. Roy. Are you aware that almost a billion dollars, does 
this sound right, that between $750 million and $1 billion have 
been spent by health care in lobbying the Federal Government in 
the health care industry across sectors?
    Dr. Ippolito. While I don't know the exact number I know it 
is a very large number.
    Mr. Roy. Okay.
    I am over my time. I know the Chair has been generous in 
allowing some folks to go over their time. I want to be mindful 
of the witnesses' time so I will leave it there. I want to 
thank each and every one of you. I started to ask questions of 
all four of you. I wish we had a little bit more time.
    I think this has been an important hearing. We need 
competition if you are going to get prices down. I don't care 
whether you are right, left, Democrat, or Republican, we are 
not going to be able to have health care if you can't get 
prices down through competition and empower doctors, patients, 
not big corporations, in the form of insurance companies, 
hospital companies, and Pharma.
    We have got to restore power to patients and doctors, and I 
think consolidation is a problem and also freeing up people 
through health savings accounts is a problem.
    I appreciate it. I yield back.
    Mr. Moore. Thank you to the gentleman from Texas, we need 
to treat consumers like we treat consumers in every other 
industry almost in this Nation and trust the fact that they can 
make some of their own decisions based on information that they 
have to make a thoughtful decision. Thanks to the gentleman 
from Texas for highlighting some really key points.
    I now yield five minutes to the gentleman from Kansas, Mr. 
Estes.
    Mr. Estes. Thank you, Mr. Chairman, for calling this 
hearing, and then thank you to all of our witnesses for being 
here.
    You know, today I just left the Ways and Means Health 
Subcommittee who is holding a hearing on a very similar topic, 
and a physician from Wichita was one of the witnesses, so I am 
keenly aware of the bureaucratic red tape, the lower 
reimbursement rates, the rising prices, and the impact that 
they have on independent physician practices, and that we are 
seeing private practices close or consolidate as a result.
    As I have spoken with patients and providers and physicians 
and support staff throughout Kansas, consolidating or closing 
practices is not helping Kansans receive quality health care. 
With fewer and fewer doctors and nurses in private practice, 
patients are seeing increased costs and worse outcomes.
    The Kellogg School of Management notes that prices increase 
about 14 percent when a private practice is acquired by a 
hospital, and a National Opinion Research Center survey found 
that 45 percent of physicians report deteriorating patient-
provider relationships after consolidation. Increased costs and 
diminished outcomes are not the recipe for a healthy society.
    Dr. Bruggeman, in recent years we have seen a significant 
decline in the number of independent physician practices and an 
increase in the number of practices owned by hospitals and 
health systems. Based on your experience as a practicing 
orthopaedic surgeon, what incentives do you see in the 
marketplace for physicians to sell their practices to hospitals 
and health systems?
    Dr. Bruggeman. Yeah, I think it is two things. It is 
economics and getting back to taking care of patients. The 
economics are not in our favor in private practice and they are 
in our favor and a guaranteed salary that someone else is 
responsible for.
    And then we are trying to spend more time taking care of 
patients and by selling your practice you offload that 
regulatory burden to another entity who now takes it on for 
you, and so physicians are theoretically able to spend more 
time taking care of patients and that is why they are giving up 
control of their practice.
    Mr. Estes. Yeah. You noted in your testimony that the cost 
for procedures commonly conducted in your practice would 
increase approximately 30 percent in concentrated markets 
compared to more competitive ones. What causes prices for the 
health care services in consolidated markets to be higher?
    Dr. Bruggeman. It is the bargaining power that those 
consolidated groups have. They are able to ensure higher 
payments because they are in a larger group.
    Mr. Estes. And those are some of the issues I think that 
several of my colleagues have talked about today in terms of 
the impact and as my friend from Texas just went through a 
whole litany of some of the concerns over the last few years.
    Again, based on your experience as an independent 
physician, what consequences are there for patients, the local 
community, Federal and state budgets when independent practices 
are acquired and the cost of health care goes up?
    Dr. Bruggeman. In my community we had a group that decided 
to sell to a local health care system. One of our largest 
employers is the grocery store so what that is going to mean 
for every single person in my community is higher grocery 
prices because those costs are ultimately going to have to be 
passed along to our community.
    And so it is an access issue where people have a harder 
time getting their doctors. They are not able to get primary 
care physicians, and then it becomes a cost issue where we have 
to pay more for goods, not just for health care but for goods 
in general as these consolidations occur.
    Mr. Estes. Yeah. Well, I just want to thank all of you 
panelists for being here. Obviously, this is an issue that is 
of paramount importance for our country.
    I mean, because it doesn't just affect individuals, but it 
affects, as we talk about from the Budget Committee side, the 
concern about our debt and deficit for the country.
    Obviously, we want a vital, vibrant health care system to 
support all Americans in their health care needs, but we also 
need to make sure that it is affordable and that the processes 
work.
    Mr. Chairman, I really appreciate this process so thank 
you. I appreciate having the witnesses together, and I want to 
make sure that--you know, so many of my fellow Kansans are 
being crushed with inflation the way it is going now, 
particularly with the economy and some of the regulatory 
burdens that have been imposed in the last few years, and we 
just can't afford to have this continued increase in prices.
    I yield back, Mr. Chairman.
    Mr. Moore. Thank you to the gentleman from Kansas.
    I will now yield myself five minutes to jump in here as 
well.
    We will talk a little bit about competition and how we can 
address that to some degree, but, I mean, it is crucial to 
driving costs down and we know that.
    I am into this my second term. It was a debate question 
that I had in my very first debate that I ever had as a 
potential Member of Congress back in 2020, and it is 
frustrating to be here almost four years later still talking 
about the same thing, and I haven't solved it yet in my first 
two terms, but I have seen progress. I have seen a recognition 
that it needs to happen. Look, there are going to be times 
where you are in an ambulance and you are incapacitated and you 
are not going to choose which X-ray you are going to go to. 
Yeah, we know that. That is the point, that we can do better 
than what we are doing.
    But we recognize there is a difference in health care than 
there is in other industries, whether you are choosing which 
grocery store to shop at versus which emergency room to visit. 
Yes, we recognize that, but we can't give up on that the fact 
that it is a different industry, we just can't give up the fact 
that, you know, that there are better opportunities out there 
and we can't continue to do things the way that we have been 
doing them.
    The Federal Government spent roughly $1.5 trillion on our 
major health programs. That is more than defense and our 
entire, basically our entire discretionary budget, just on one 
specific issue.
    We know health care costs for the Federal Government and 
patients alike are on an unsustainable path in this country and 
they are a major driver of Federal spending comprising 17 
percent of GDP in 2022.
    Solutions that can enhance transparency and promote 
competition will be critical to tackling this problem. Last 
year, House Republicans advanced bipartisan legislation, the 
Lower Costs, More Transparency Act, to combat consolidation and 
enhance free market competition. We have more work to do to 
improve the health system.
    Dr. White, I wanted a chance to hear from you. How does CBO 
approach estimating the budgetary effects of policies that aim 
to directly combat consolidation or inject competition into 
health care providers or payers? And does CBO credit any 
savings from this downward pressure on costs from increased 
competition?
    I know your job at CBO is very difficult and you have to 
take in more almost abstract consequent ideas. We talked 
earlier about medical innovation and there is so much benefit 
to that potential of incorporating.
    It is tough to incorporate into scoring. I get it. I would 
love to hear your thoughts on that, though.
    Dr. White. Sure. So let me give one example which is site-
neutrality in Medicare. We have talked a lot about how that 
would tend to promote competition and take a thumb off the 
scale that is increasing consolidation, but there, the scoring 
would first start out with just figuring out how is that going 
to change Medicare prices and Medicare outlays?
    And then we would look at, is this a big enough deal to 
deflect the trajectory of consolidation? And is that going to 
affect the prices that private insurers pay?
    On other types of policies like funding for FTC or other 
pro-competitive measures, we would just look closely at, is 
this meaningful enough, big enough in the context of all the 
forces driving consolidation to deflect the trend to 
consolidation?
    And then if so, we would think about how that is going to 
affect the prices that private insurers pay.
    Mr. Moore. Excellent. That actually hits on the other 
question that I had so I will leave it be. It is just so much 
of what we do gets pinned down to the way the scoring plays 
out, and I know I share the actual Chairman of this Committee, 
it's not mine, I share his thoughts on needing to make any 
reforms we can to being big picture, thoughtful, futuristic on 
how we approach this issue.
    Because if we keep doing the same thing we have been doing 
we are just going to keep financing it in a different way, and 
we are not going to drive costs down. That is what we have to 
do, and we see it in other industries.
    Lastly, Dr. Ippolito, thank you for the last several weeks 
of your engagement with us and what AEI does to help provide a 
real thoughtful approach to issues all across the board, but 
particularly health care.
    We have heard a lot about in this Congress about vertical 
consolidation among payers, such as when a health plan acquires 
a pharmacy benefit manager or a pharmacy even. What impact do 
these mergers and acquisitions and this consolidation have on 
Federal spending and patient access to quality and affordable 
care, particularly in rural areas?
    Dr. Ippolito. You know, there are potential benefits from 
these kind of arrangements, but in terms of things you would be 
concerned about, the big question is do these entities start 
behaving in their own self-interest to the point that it is a 
negative for quality or access?
    Do they start preferencing their own providers they are 
integrated with? Do they preference drugs that they ship to 
your house through their specialty pharmacy?
    And while I don't know that we have great evidence on that, 
those are the areas that I would focus on.
    Mr. Moore. Excellent. Thank you very much, and I will cut 
myself off but I am going to hold on to the gavel so just 
remember that, Mr. Ferguson, when we get to you.
    Next up we will go--I will yield five minutes to the 
gentleman from Oklahoma, Mr. Brecheen.
    Mr. Brecheen. Thank you, Mr. Chairman.
    Health care spending keeps going up in tandem with 
government involvement. We know that. So how do we have great 
care but at the same time allow people to keep the fruits of 
their labor?
    The framers of our Constitution understood that we have to 
have a free market. You have to have consumer choice. The best 
allocation of hard-earned dollars is a free market.
    Thomas Jefferson advised in 1787 that the Bill of Rights 
should include restrictions on private monopolies, 
interestingly enough. In 1788, James Madison called monopolies, 
``The greatest nuisance in government.''
    He went on further to say that, ``Monopolies are 
sacrificing the many to the few. Monopolies are an antithesis 
to the free market. The free market will always work absent 
monopolies,'' and this is destroying consumer choice.
    By the way, I would note that governments can become 
monopolies, too, when you take that all health care spending 
right now, the Federal Government is 35 percent of it, state 
and local is 15 percent of it. That is almost half of all 
spending is the government. It is a monopoly.
    And so, again, in tandem, what we see is the more 
government increases, so does the price. When the government 
tries to make things affordable it makes it expensive for 
everybody.
    Between 2002 to 2020 there were 1,000 mergers in hospitals 
in the United States, and on the concept of monopolies, each 
time these mergers occurred they led to an average increase in 
consumer cost of $521.
    In 2023, three pharmacy benefit managers, PBMs, processed 
79 percent of all prescription drug claims. Each of these PBMs 
being owned by a health insurance agency. The average family 
health insurance premium of 2010--think government monopoly--
the year Obamacare became law was $13,000 according to the 
Kaiser Family Foundation. In 2024, the average family health 
insurance premium is now $23,000, almost a doubling of the cost 
according to CNN.
    In 2010, the average salary of a hospital CEO was $182,000. 
Now in 2024, that average CEO is getting $700,000, according to 
the Lown Institute.
    $35 trillion in debt, health care spending is the biggest 
contributor to our debt behind Social Security. What we spend 
on health care is 20 percent of our GDP. 20 percent of our 
entire gross domestic product is going to health care spending. 
What we spend on the government viewpoint is three times what 
we spend on defense.
    I want to add one more thing that is interesting because 
people think that in America our health care outcome is 
comparative to other nations. It is important to note, on the 
average outcomes comparable to the other advanced nations we 
are getting the same results, but we are spending $12,000 per 
person, and these other countries, these advanced countries, 
are spending $6,000. Something is happening.
    Again, I go back to the concept: the more government 
involvement we see, whether it is over time, the less 
competition, less choice of allocation of scarce resources.
    So let's discuss direct primary care because I think that 
is one of the most unique elements that is out there.
    It is where a physician can say for $50 to $100 a month, I 
will take care of your basic needs. It gets government, it gets 
insurance out of the mix, and so I would love to hear from you 
all quickly about direct primary care and your thoughts on 
that? Dr. White?
    Dr. White. First, this may come across as a little bit of a 
dodge, but--and I know HSA policy is related to direct primary 
care and can you pay for direct primary care out of HSA policy 
is also baked into the Internal Revenue Code, and so our 
colleagues at the Joint Committee on Taxation would lead 
analysis of that.
    That is just something I want to flag. We would work very 
closely with them in thinking about HSA policy if it were 
expanded to allow purchase of direct primary care. We would 
help them think about competitive effects, price effects, 
broader market effects, but they would take the lead.
    Mr. Brecheen. For the American Enterprise Institute, direct 
primary care? Your thoughts on how it is showcasing allocation 
of scarce resources in a competitive manner?
    Dr. Ippolito. Yeah. I mean, just speaking for myself 
personally, you know, there is a conceptual appeal to this 
which is that if we can move in the direction of having health 
insurance focus on the expensive, unexpected stuff and less on 
the relatively predictable, low-cost things, then we get a more 
efficient health insurance system.
    So generally speaking, to the extent that direct primary 
care is trying to work in that direction, I think it has some 
appeal.
    Mr. Brecheen. So, well, at least for time considerations, 
so also what we see is post-Affordable Care Act, again, 
whatever you try to make affordable you make more expensive. We 
know that, 46 percent increase in cost just since Obamacare. 
More government, more cost.
    What we are losing is catastrophic loss coverage and me 
caring about the price of things. When I go through a health 
care expenditure, what I am worried about, when I am going to 
pay for something, I care about quality plus price.
    But when insurance paid for it I just care about quality. 
So I am only concerned about my copay or my deductible. How do 
we get catastrophic loss-type policies back into the markets in 
tandem with deductibles that would be, you know, a part of that 
and me self-insuring in part, so that everybody has skin in the 
game over price. I will go back to you, the American Enterprise 
Institute. I am over time.
    Dr. Ippolito. Yeah. I am over time so I will be very brief, 
but just say that I think there is a lot of conceptual appeal 
to this idea of getting a more efficient health insurance plan 
that focuses specifically on the expensive stuff that is hard 
for you personally to insure against and focusing less on using 
all this bureaucratic cost to pay relatively routine low-cost 
bills.
    Mr. Brecheen. And with that, Mr. Chairman, thank you for 
your indulgence. I yield.
    Mr. Moore. The gentleman yields.
    I now recognize for five minutes the gentleman from 
Georgia, Mr. Ferguson.
    Mr. Ferguson. Thank you, Mr. Chairman. Before I get into my 
questions I would ask unanimous consent to submit to the record 
letters and statements from the following organizations, 
including Better Solutions for Health Care, American 
Pharmacists Association, Coalition Against Socialized Medicine, 
Dr. Rick Snyder, President of Heart Place, and Patients Rising.
    Mr. Moore. Without objection.
    [The information follows:]
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    Mr. Ferguson. Thank you, sir. All right. So I look at where 
we are with health care right now and I ask myself three 
questions, okay? And I am doing this as a consumer. I am doing 
it as a former provider.
    Here are the questions. Number one, is health care more 
expensive today than it was 15 years ago? Number two, are 
Americans healthier today than they were 15 years ago? And 
number three, is there better utilization of the system than 
there was 15 years ago?
    So real quickly, going down the line here, relative to 
inflation or any metrics that you want to use, does health care 
cost significantly more than it did 15 years ago?
    Dr. White. More expensive, yes.
    Mr. Ferguson. Yes? Okay.
    Dr. Ippolito. It is more expensive.
    Mr. Ferguson. All right.
    Dr. Bruggeman. Yes.
    Mr. Ferguson. Are Americans healthier today than they were 
15 years ago?
    Dr. White. No.
    Ms. Tripoli. It depends on the metric you are looking at.
    Mr. Ferguson. Okay.
    Dr. White. Life expectancy has flattened out. It stopped 
improving.
    Mr. Ferguson. All right. My dear friend and Ranking Member 
from Pennsylvania made the comment in his opening remarks that 
more people have insurance than have ever had. Access is one 
thing. Utilization is another.
    Is the utilization of the population from the middle class 
downward, is that utilization, has it increased significantly 
in the system over the last, over the last decade and a half?
    We don't have an answer to that. It's fine. We don't know. 
I am going to go back and I am going to put my provider hat on, 
okay? I was blessed enough in my dental practice to be able to 
take care of folks across the economic spectrum, folks that 
were, you know, looking for meals the next day that may have 
been on Medicaid up to folks that had unlimited means.
    And those two groups of people got the exact same level of 
care in my practice. We did not distinguish based off of 
income. They got the same level of care.
    The biggest challenge that we had, quite candidly back 
then, was the utilization of that system and understanding that 
folks that were in poverty had a crisis every day and sometimes 
preventive care was not at the forefront of their minds, 
understandably so, a lot of challenges in life there.
    But when I look at the system that is in place now, we 
cannot answer three basic questions. Does it cost less, are we 
healthier, and is the utilization of the system by those that 
primarily need it, is it better? And the answer to all of those 
is no.
    So we have heard a lot of conversation about PBMs, about 
insurance companies, about site-neutral payments; there is a 
whole litany of things that this Committee has talked about.
    All of those players in there, we have a tendency in one 
way or the other, to vilify. Aren't they just operating under 
the rules that this place created?
    So if we believe that there is too much private equity, if 
we believe that there is a lack of transparency, if we believe 
that utilization is not where it should be, if we are less 
healthy, if we are not, you know, if we are paying entirely too 
much for our health care right now, and we look at the players 
that are in the system, insurance company, PBM, pharmacy, 
hospital provider, and they are vertically integrated and they 
are allowed to do that and encouraged to do that because of the 
very rules that are in place, maybe shouldn't we be looking at 
breaking those rules apart and creating real transparency and 
competition within the system?
    I will ask that question. Should we be looking at breaking 
down the vertical integration to end the incestuous 
relationships between these entities so that you create real 
competition at the various levels?
    Dr. Bruggeman. I mean, I think the answer is absolutely 
yes.
    Mr. Ferguson. Okay. I look at what we did with the telecom 
industry. I say we, I wasn't here that long ago, thank 
goodness, but when we took Ma Bell and broke it apart and we 
created the seven Baby Bells and we opened up competition, we 
had the greatest technological innovation that you have ever 
seen. That is why we have broadband. It is why we have call 
conferencing and now Zoom.
    You are walking around with, you know, something that can 
run, you know, a spaceship in your pocket. I mean, these things 
are incredibly powerful and yet their cost relative to 
everything else has come down, right?
    Shouldn't we be looking at health care the same way? 
Shouldn't we be looking at how do you take that system, break 
it apart into different pieces that literally create real 
competition, innovation, shareholder value, and, most 
importantly, better quality of care for the patient? And part 
of that would be the elimination of the massive administrative 
costs that exist in our current health care system. Make sense? 
Doctor?
    Dr. Bruggeman. I say absolutely.
    Mr. Ferguson. Okay. Mr. Chairman, with that I yield back.
    Mr. Moore. Thank you. The gentlemen yields, and we now 
yield to the gentleman from Virginia, Mr. Good, for the 
remaining five minutes.
    Mr. Good. Thank you, Mr. Chairman, and thank you to our 
witnesses. You can see the sunlight or the daylight at the end 
of the tunnel here.
    In 2031, or roughly seven years from now, it is predicted 
that health care spending will reach $7 trillion on an annual 
basis, or about 20 percent of GDP. Our national debt is at $35 
trillion, a little over $100,000 per American citizen. We are 
on the Budget Committee here.
    The President wants to take it to $50 trillion in the next 
ten years if his budget were to be enacted, and that is without 
any additional emergency supplemental spending.
    We know the long-term trajectory for health care spending 
is not good and that has a tremendous impact on the budget. We 
really ought to be as a Congress doing hearings on how 
nutrition spending and subsidies in the ag and farm bill and so 
forth is actually funding and subsidizing the wrong kind of 
food for Americans.
    So many are profiting off sick Americans and how many 
compromised individuals are making decisions for how our whole 
system works?
    And the explosion of obesity, diabetes, chronic diet-caused 
illnesses, drug treatment proliferation, and actually, I am 
seeing reports that young people are for the first time, 
children, especially if you get diabetes at a young age or you 
are projected to live--a child who gets diabetes at an early 
age is projected to die before their parents.
    And just this explosion of this self-caused--we have 50 
percent obesity in our country and you have got three percent 
in Japan. Why is that? Because of diet.
    So anyway, health care is a huge cost here to our budget 
problems, of course, health care costs, but we are exacerbating 
it with our diet and with our whole system, our whole subsidies 
particularly in our nutrition system in that farm and ag bill.
    That said, Dr. White, transparency in health care pricing, 
consolidation in health care markets has accelerated in recent 
years. There is less competition, yet there is increased 
Federal spending and yet costs continue. That is the one 
constant as Mr. Ferguson said a moment ago, that costs continue 
to rise.
    CBO states that increased transparency in health care 
reduces costs because it gives patients and plan sponsors more 
info to make informed decisions. By negotiating with drug 
manufacturers and pharmacists to control costs, PBMs have a 
significant behind-the-scenes impact in determining total costs 
for insurers, shaping patients' access to medication and to 
determine how much pharmacies are paid.
    Where are you at with believing that, you know, does 
increased transparency actually--some have said that increased 
transparency will raise costs because the PBMs can collude and 
some claim that the transparency inhibits the payers' ability 
to negotiate prices. Where are you at with, in terms of 
transparency and price? Where are you at and what is the impact 
that is going to have?
    Dr. White. You know, in general we think about who needs 
information to buy the services they are buying? How are they 
getting that information? Are they able to act on it?
    And in the PBM space employers are choosing health plans, 
including PBMs, and if they have better information on PBMs and 
what different PBMs charge they are going to be able to shop 
better for PBM services. So more transparency for employers, 
especially small employers, is going to drive down the fees 
that PBMs are able to retain.
    Similar with state Medicaid agencies, if they have better 
visibility into what different PBMs are charging they can shop 
better for PBM services. That lowers Medicaid costs. That 
lowers the Federal deficit.
    Mr. Good. Switching to 340B for a moment in the limited 
time that I have, that is an important program for my district 
being a predominantly rural district. How has the 340B program 
contributed to consolidation in the hospital markets and the 
proliferation of contract pharmacies that are owned by these 
large health insurance companies?
    Dr. White. That is a great question. We are digging pretty 
deeply into the 340B program right now, and at a high level if 
you were an oncology practice and you are facing the choice of 
joining a large system and becoming a 340B-covered entity or 
remaining independent, if you join the 340B system you can buy 
your drugs at a heavily discounted 340B price, sell them to 
Part D patients, private patients, at a much higher price.
    That is a financial windfall that can be shared between the 
oncology practice and the larger system. To my read of the 
evidence it is clearly a contributor to consolidation.
    Mr. Good. So what would you do about that?
    Dr. White. We don't recommend policy, but my sense is that 
there is a lot of interest just in more visibility into how the 
340B program works, what facilities are doing with the revenues 
they get. That seems to be where the discussion is mostly at 
these days.
    Mr. Good. All right. I thank you, sir, and I yield, Mr. 
Chairman.
    Mr. Moore. Thank you. The gentleman yields.
    Thank you all, Dr. White, Dr. Ippolito, and Dr. Bruggeman, 
and Ms. Tripoli. Thank you for appearing before us today.
    Please be advised that Members may submit written questions 
to be answered later in writing. Those questions and your 
answers will be made part of the formal hearing record.
    Any Members who wish to submit questions for the record may 
do so within seven days.
    With that, the Committee stands adjourned.
    [Whereupon, at 12:17 p.m., the Committee was adjourned.]
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