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Photo by Teresa Crawford/​The Associated Press

Houston — A series of grants from the Laura and John Arnold Foundation (LJAF) will target rising health prices in the private insurance market. The initial investment of $3.4 million will be used to clearly define the causes behind the increases, develop evidence-based policy recommendations to address the problem, and provide assistance to governments and employers seeking to implement those changes.

The new health care price initiative, which is an expansion of the foundation’s previous efforts to combat rising drug prices, will include partnerships with the Brookings Institution, the National Governor’s Association, Yale University, Manatt, Johns Hopkins University, and the Health Care Markets Research Lab at Harvard University, among others.

Americans pay extraordinarily high prices for hospital and physician services that are reflected in their insurance premiums and cost-sharing. And we are seeing more stories in the news about surprise bills exposing patients to excessive charges not covered by their insurance,” said LJAF’s Vice President of Health Care Mark Miller. With 40 percent of Americans unable to afford an unexpected $400 expense, you can see why this is such a critical issue.”

These skyrocketing costs are the product of a dysfunctional market, and over the past three decades, the problem has been magnified by a substantial increase in provider consolidation. As hospitals and physicians have merged, providers have gained disproportionate market power, allowing them to extract higher prices from insurers and patients. This trend increases out-of-pocket costs and premiums for patients, and increases the costs of insurance paid by employers and governments.

Along with research partners, LJAF will take a multipronged approach to tackling the problem by: 

  • More clearly defining the drivers of high prices,
  • Developing evidence-based policy recommendations for federal and state governments on issues such as surprise out-of-network billing, triggering competition through lower premium insurance products based on public sector payment rates, and potentially regulating payment rates in the commercial market, and
  • Providing hands-on technical assistance to employers, states, and the federal government to help them design and implement policies that lower prices.

The main objective of the Arnold Foundation’s health care portfolio is to lower health care spending and improve affordability for patients, employers, and governments.