Across the country, a troubling trend is emerging: lawmakers are tightening the screws on hospitals, while largely ignoring the far more profitable and opaque practices of insurance companies.
Hospitals, especially nonprofit systems that care for underserved populations, are operating on razor-thin margins, averaging 2.3%, with many falling well below that line. Meanwhile, insurers like UnitedHealth Group boast an 8.1% operating margin and soaring revenues, with peers like Anthem in a similar standing. These payors rake in billions while tightening their pockets and offloading costs onto patients. Yet, it’s hospitals, not insurers, that bear the brunt of regulatory heat.
Nowhere is this imbalance clearer than in states like Indiana and Colorado, where lawmakers are slapping on rate caps under the guise of affordability.
Indiana nonprofit hospitals barely eked out 0.9% operating margins last year and they’re still being accused of price gouging. Colorado lawmakers are also trying to budget-cut their way to better care while ignoring inflation, rising costs, and the need for hospitals to have cash on hand to invest in patient care.
Spoiler alert: these policies aren’t improving the system—they’re setting up underserved communities to lose big.
As if hospitals didn’t have enough on their plate, states are now lining up to slash Medicaid reimbursements—a critical funding source for many safety-net hospitals. In Connecticut, proposed changes would strip an estimated $150 million from hospitals still catching their breath after the pandemic. Delaware has gone even further, creating a politically appointed board to oversee and meddle with hospital budgets. Meanwhile, California has put a hard cap on healthcare cost growth, and its hospitals, which get slapped with penalties if spending goes over.
These aren’t isolated policies. They’re part of a growing, misguided narrative that blames rising healthcare costs squarely on providers, while others in the system escape meaningful accountability.
Let’s be clear: controlling healthcare costs is essential. But hammering hospitals while allowing insurance giants to go unscathed is not reform; it’s deflection.
If left unchecked, the already lopsided healthcare landscape will only tip further out of balance. Hospitals and health systems—the true advocates for patients—must raise their collective voice, cut through the noise, and set the record straight on issues impacting their sustainability:
- Holding insurers accountable for fair, transparent reimbursement rates.
- Protecting Medicaid funding, not cutting it, so hospitals aren’t forced to close doors or reduce services.
- Addressing pharmaceutical price gouging, which burdens both patients and providers.
- Investing in upstream, preventive care to reduce downstream, high-cost emergencies.
The industry can’t sustain punishment for caregivers while ignoring the gatekeepers. For providers to thrive, policymakers must consider the entire healthcare ecosystem, not just the hospitals that work hard to care for our communities.
