White House report: hospital contract ban would cut U.S. health costs by $45 billion

A White House report released June 18 estimates that banning three contract clauses between hospital systems and insurers could reduce annual U.S. health spending by $45 billion to $63 billion. The clauses in question are anti-steering provisions that prevent insurers from directing patients to lower-cost providers, anti-tiering rules that block placement of hospitals in lower benefit tiers, and all-or-nothing requirements that force insurers to contract with every facility in a system.

In markets where the clauses are common, the report projects an 18 percent drop in hospital and physician prices, or roughly $4,100 per inpatient admission. Premiums would fall about 7 percent, saving the average family around $1,800 per year. The analysis attributes the projected savings to three mechanisms: an 8 percent reduction from increased insurer bargaining power, a 4 percent decline from greater use of lower-cost providers, and a further 3 percent drop from new market entry by efficient competitors.

The Department of Justice settled an antitrust case against OhioHealth on June 18 that bars the system from using the clauses; a similar suit against New York-Presbyterian Hospital remains pending. A 2022 settlement with Sutter Health in California required the system to pay $575 million and discontinue the provisions.

Connecticut, Massachusetts, and Texas already restrict some of the clauses, though enforcement varies by state. Federal lawmakers have introduced the Healthy Competition for Better Care Act to impose a nationwide prohibition. A White House spokeswoman said the administration is examining ways to limit the clauses without price controls or additional regulation, citing the report as evidence that competition can lower costs.