Sharpening our Focus on US Health System Transformation

The U.S. spends over $4 trillion each year on health — far more in total dollars, share of gross domestic product, and per capita spending than any other developed country. At the same time, U.S. health outcomes do not reflect a sufficient return on investment. The U.S. has lower life expectancy rates and higher maternal and infant mortality and obesity rates than comparable developed countries. Rising medical care costs are unsustainable for government, businesses, and families. Access to affordable care is not available to all — an acute problem in Texas, which has the nation’s largest number and percentage of uninsured residents. The system is not optimally organized nor financed to provide whole-person, prevention-oriented care — which adversely impacts costs and outcomes. 

The U.S. Health System Transformation Program, a part of the Baker Institute Center for Health and Biosciences, conducts research and makes policy proposals to identify and address opportunities to improve the U.S. health system. Led by fellows Vivian Ho and Elena Marks, our team examines questions around access to health-promoting services, the quality and costs of services, and health outcomes in the U.S. and Texas. Our current areas of inquiry are outlined below, followed by new questions we expect to explore going forward.

Fair and Transparent Pricing of Health Care Services

During the Trump administration, the Centers for Medicare and Medicaid Services promulgated rules to require that hospitals establish, update, and make public a list of their standard charges for items and services they provide. The purpose of the requirement was to enable the public to make more informed decisions about health care, increase market competition, and ultimately drive down the cost of care. Because payments to hospitals account for nearly one-third of total U.S. health expenditures, efforts to control these costs are important to government, business, and families who pay for health care.

As hospitals began reporting their prices under the new rules, health system researchers began reviewing the data. Initially, researchers explored questions relating to hospitals’ compliance with the reporting requirements, which has improved over time. Increasingly, researchers are using the publicly reported data to compare and contrast hospital pricing and track the impact on hospital pricing in light of the reporting requirements.

At the Baker Institute, our experts have examined compliance with the transparency rules by Texas hospitals, pricing and transparency among top national hospitals, and pricing comparison among Texas Medical Center hospitals.      

Nonprofit Hospitals Commitment to Community Benefits

Nonprofit hospitals are exempt from paying most local, state, and federal taxes. They can also issue tax-exempt bonds and receive tax-deductible contributions. In exchange for this favorable tax treatment, nonprofit hospitals are expected to provide benefits to their communities, and they must report these expenditures to the IRS annually. Community benefits include a variety of expenditures, some of which support community-beneficial hospital operations, and others of which support external community endeavors. There is vigorous debate across the country, including in Congress, about whether these hospitals are returning sufficient value to their communities to justify their special tax status.

At the Baker Institute, our experts have published an analysis of nonprofit hospitals across the U.S. to explore the relationship between profits and cash reserves and the provision of charity care (a form of community benefit). The Center for Health and Biosciences also hosted a Harvard-based physician researcher to lead a panel discussion on how hospitals can improve their community benefit performance.

Changing Health Care Spending Patterns to Improve Health Outcomes

Decades of research have shown that social, behavioral, economic, and environmental factors account for 80% of health outcomes, while medical care accounts for only 10%-20%. Other developed countries that invest more resources in these non-medical factors — and less in medical care — have better health outcomes than the U.S. In recent years, federal, state, and local policymakers have recognized the opportunity to improve health outcomes and lower health care costs by directing some of the nation’s $4.3 trillion health expenditures upstream to pay for services relating to food, housing, transportation, and other non-medical needs that directly impact health outcomes.

Baker Institute experts are helping to advance the incorporation of non-medical services into the health care delivery and financing systems across Texas by educating the industry about new state and federal laws and regulations that support this shift in funding. In partnership with UTHealth-Houston’s Center for Health Care Data, Baker Institute experts established the Texas Consortium for the Non-Medical Drivers of Health where researchers, practitioners, and policymakers across Texas come together to advance the integration of non-medical interventions into the health care system.

Access to Affordable Care for All

Accessing affordable care in the U.S. is largely dependent upon whether a person has access to high-quality insurance coverage. In fact, health insurance is the primary source (70%) of the $4.3 trillion the U.S. spends annually on health expenditures. The importance of health insurance as a means to access to care was made clear by a Wall Street Journal study showing that hospitals often charge uninsured people their highest prices.

The U.S. stands out among other developed countries for lack of universal health insurance coverage as a matter of public policy. While the Affordable Care Act (ACA) closed some of the coverage gaps, Texas has not realized the full benefit because the state has not accepted the Medicaid expansion option.

Having tracked the implementation of the Affordable Care Act since its earliest days, our experts continue to address the health and financial benefits of expanding access to insurance coverage in Texas. Issues addressed include the impact of the ACA Marketplace, options for obtaining universal coverage, opportunities to improve the ACA, and Medicaid expansion.  

Additional Areas of Exploration in Health System Transformation

Slowing the growth of employer-sponsored health insurance premiums: How can employers assist their employees in obtaining high-quality, cost-effective care?

Women’s reproductive care: How might we better organize the fragmented health system to support optimal health outcomes for women throughout their reproductive years?

Emergency medicine and 9-1-1: What strategies are effective for reducing inappropriate use of emergency medical services and emergency rooms?

Payment reform: How can the health care financing system be modified to motivate high-cost providers to reduce their costs?

The Baker Institute U.S. Health System Transformation Program will continue to conduct research into the best ways to revitalize the U.S. health care system throughout 2023 and beyond. Check out our website for the latest health-related research and events.