Look to Policy, Not Patients, to Keep Health Care Costs in Check 

At 11 pm on a Sunday in late June, I got a call from my 20-year-old daughter, sobbing. She described explosive diarrhea and vomiting, alone in a dorm room in the middle of Manhattan. Now, I expect this was cyclosporiasis, but in late June, it was hard to know. She was scared, and I provided my usual advice: She would be fine and should take some Pepto.

An hour later, it was worse, so we found an open urgent care center nearby. She was in the middle of New York City, but after 9 pm, her choices narrowed. The staff did what I expected (I’m not that kind of doctor, but I am Dr. Mom). They gave her IV fluids, anti-nausea and anti-diarrheal drugs, and told her she had some kind of foodborne illness. No diagnostic tests were performed, no definitive diagnosis was given, and there was no report to the health department. She was reassured she wasn’t in danger, and she had help treating the symptoms.

Even though she continued to feel sick on and off for the next few weeks, for us, the visit was worthwhile to treat the most extreme symptoms and to reassure her that she would be OK. That’s worth a lot. The bill, however, was a real surprise: $2,933.81. It included $2,000 for an IV push (50x Medicare and 4-33x typical charges) and $800 for the office visit (7x Medicare, and 2-3x typical charges). I’ve read the stories about eye-popping, six-figure bills; mine doesn’t compare, but it shows how even basic care costs can be unpredictable, and could add up for a payer, or upend a family budget.

Improving Consumer Choice Alone Won’t Keep Prices Low

In Milbank’s health care affordability work, we see many causes of rising costs, but one stands out: limited competition in health care markets that leads to limited choice. In competitive markets with multiple providers and insurers, consumers have some options for balancing costs and quality by choosing between insurers and providers. In markets with limited or no competition, prices don’t reflect value or quality; they reflect the provider’s market power. Most of the time, those high prices are simply passed on to consumers in higher premiums, co-pays, and deductibles.

While competition and choice are arguably good, they don’t often mean much to patients in an urgent moment. Here’s my kiddo, in the middle of the biggest city in the country, with possibly the most choices for urgent care. She went to what was open and closest and had no idea what the charges would be. And in that moment, neither of us had to care because of our coverage.

With health care, we often can’t control what we need or when we need it. Most patients don’t have the technical expertise to judge the quality of care, and almost none of us can predict what the cost will be after insurance pays. Could my daughter and I have saved ourselves and the insurance company some money by waiting until 9 am on Monday? Absolutely. Was that a major concern during a scary and painful illness? No.

For many of us, the same is true for planned care. When I needed minor surgery, I went to the ambulatory surgery center my doctor referred me to. Even a health policy wonk like me didn’t comparison shop at all; I expected my insurance would cover a direct referral, which it did, and I trusted my provider’s judgement on the quality of care. Having options is critical to cost and quality, but it isn’t enough to control costs.

My family’s story has a happy ending, but too many stories end with delayed care, worse outcomes, and unnecessary hospitalizations and deaths. A third of Americans postponed or delayed care due to cost in 2025, according to KFF, with a staggering 75% of uninsured Americans under age 65 doing the same. A West Health-Gallup Center on Healthcare survey finds one-third of Americans say they skipped needed care altogether because they couldn’t afford it. This delayed or forgone care, preventable disease and death, and money diverted from other family needs harm health and well-being for the American public. (See Christoper Koller’s Milbank Quarterly Opinion on defining affordability.)

State Policy Tools to Control Health Care Prices

Individuals, and even employers and insurers, have not been able to hold health care prices in check. The cost of health care is now American’s number one affordability worry. Those of us paying the bills — individuals, employers, and other purchasers — can’t do this alone, and we can’t even do it together. We need government leaders to respond. And the American public wants government to act: 91% of voters want Congress and the President to act to lower health care costs, according to a Families USA poll.

States have a variety of policy tools that impact health care prices. In many states, the government is the largest health care purchaser, through Medicaid, CHIP, state employee benefits, and other state-run health programs. They are regulators of quality, supply, competition, and cost, with variable authorities. States can convene stakeholders, collect data, and publish information useful to consumers and employers. They will need all these tools to make health care affordable.

Like families, government leaders face trade-offs. Health care costs are a major force in state budgets, with Medicaid alone accounting for 30% of all state expenditures. The cost of health care affects state policy priorities profoundly, with increases in Medicaid and other health care programs narrowing states’ ability to support citizens in other ways. This reality will confront the nation’s new governors in 2027, when 36 states are holding elections.

Even public policy solutions intended to make health care more affordable have broken down in the face of double-digit cost growth: the ACA subsidies enacted and then repealed were a direct result of higher premiums and health systems costs. That’s why some state leaders have focused on identifying the drivers of rising health care costs. Since 2021, the Peterson-Milbank Program for Sustainable Healthcare Costs has focused on helping states build cost growth target (CGT) programs and similar programs, creating a trusted community of 13 states. Their efforts shine a light on cost drivers, but transparency alone hasn’t bent the curve. 

Many of these states are now implementing or considering price control policies based on what they made plain in the data: commercial prices are driving up costs of the whole system, and population health is suffering as a result. We are now seeing affordability as part of broader-based health care systems transformation efforts, with state legislation often aiming to reduce costs while increasing access to high-value primary care. New governors are likely to follow this trend given the many pressures on the health care system, state budgets, and clear voter sentiment.

For decades, states have innovated solutions to the most pressing health policy problems, with those solutions being adapted and adopted across the country and nationally. At Milbank, we know states will once again lead the way to more affordable health care.