Of the $4.5 trillion the U.S. spends on health care every year, the largest proportion — almost one-third — goes to hospitals. The cost of hospital services has consistently outpaced the overall inflation rate for at least two decades. If Vice President Kamala Harris and former President Donald Trump really want to reduce health care costs — as they both say — addressing this trend should be a priority.
Hospitals are heavily regulated, labyrinthine institutions that straddle the public and private sectors. In many cases, their pricing is subject to forces beyond their control. But absent a major reform to the U.S. health-insurance system, more straightforward changes can still help rein in spending.
Consider hospitals’ biggest expenditure — labor — which accounts for 60 percent of spending. Workforce shortages are often blamed for these costs. The government estimates shortages of almost 140,000 physicians over the next 15 years. Yet shortages aren’t inevitable. In many cases, they’re the result of policies that should be revised.
An obvious place to start would be so-called scope-of-practice laws. Most health care workers require a license, which is granted by state authorities. Officials establish education and training standards, as well as rules dictating what certain professions can (and often cannot) do. Proponents say such laws are needed to protect patients, and limiting complex cases to skilled professionals makes some sense. However, needlessly strict laws limit access to care and have been shown to increase costs.