06/02/2026
If you’re frustrated by rising health care costs, you’re not alone — and you’re not wrong to question the usual explanations. We’re often told that high prices are the result of “market failure” or not enough government involvement.
But new research highlights a very different reality: Government policy itself is a major driver of the hospital cost crisis.
A recent analysis from the Paragon Health Institute lays it out clearly.
• Reduced competition has been the result of federal and state policies that have fueled hospital consolidation.
• This allowed dominant health systems to charge significantly higher prices.
• Since 2000, hospital prices have increased three times faster than inflation and twice as fast as wage growth.
• Hospital price inflation outpaces every other major sector of the U.S. economy.
All of this was caused by certificate-of-need laws, restrictive licensing, and complex reimbursement systems that don’t protect patients — they protect entrenched interests at the expense of patients.
Bottom line: This results in fewer choices, less competition, and higher costs for everyone.
When hospitals merge and face fewer competitors, prices go up — sometimes dramatically — without corresponding improvements in quality.
And because government programs often set pricing structures or distort incentives, these systems can thrive without the kind of accountability we expect in other parts of the economy. They also raise costs for taxpayers and worsen budget deficits.
The claim that this is a market failure simply is not true. Instead, it’s a failure to allow markets to function.
What’s the alternative?
Across the country, a growing number of innovators are showing that there is a better way — one rooted in transparency, competition, and patient empowerment.
Take the Surgery Center of Oklahoma, cofounded by Keith Smith.
This facility operates on a simple but transformative idea: Post every price online, up front and all-inclusive. Patients can see exactly what they’ll pay for procedures — from a gallbladder removal to a joint replacement — before they ever walk in the door.
No hidden fees, no surprise billing, and no games.
You can see how this model works in practice here: Watch transparent pricing in action.
This approach lowers costs and restores trust. And perhaps most importantly, it introduces real competition into a system that desperately needs it.
That’s why we at Americans for Prosperity are increasingly focused on advocating direct-pay health care models. It’s a broad movement that includes:
• Direct primary care, where patients pay a flat monthly fee for unlimited access to their doctor
• Direct-to-consumer drug purchasing, cutting out middlemen and lowering prices
• Expanded use of health savings accounts, giving individuals more control over their health care dollars
These models all share a common principle: Put patients, not bureaucracies or insurers, at the center of the system.
And they’re gaining traction because they work.
If we want to bring down costs and improve access, we need more of this — not less. That means removing barriers to entry, encouraging price transparency, and allowing providers to compete on value.
You can learn more about why competition is essential to fixing health care here: Watch why competition matters.
All these reforms are part of a broader vision known as the Personal Option — a patient-centered approach that empowers individuals to make their own health care decisions while fostering innovation and competition.
The bottom line is simple: The current system isn’t just expensive — it’s structurally flawed. But there is a path forward.
If you haven’t already, now is the time to make your voice heard.
Tell your elected officials you support a Personal Option in health care and want a system that puts you in charge, with real transparency, more choices, and true competition.
Because when patients are in control, everyone benefits.
by Dean Clancy
Senior Health Policy Fellow
Americans for Prosperity - Oklahoma
