Since 2000 prices at American hospitals have soared by 250%—twice the overall rate for medical care and almost three times inflation. Hospitals now account for nearly a third of all American health-care spending. Their high prices are "the key reason that the US spends so much on health care", according to Christopher Whaley of Brown University.
Two-thirds of Americans are covered by commercial insurance (the kind offered with a job). Typically the price of care is negotiated between insurers and hospitals, but this has failed to keep costs down. In nearly half of metropolitan areas in 2023 either one or two health systems controlled the entire inpatient-care market. Studies have linked consolidation to rising prices with scant improvement in quality. Hospital care is far from a perfect marketplace: patients rarely shop around, prices are not always obvious, and insurance shields patients from the worst of the costs.
In 2025 both Indiana and Vermont passed unprecedented laws limiting how much hospitals can charge patients with commercial insurance.
Indiana's caps apply only to non-profit hospitals, which must bring their prices below a statewide average by 2029 or risk losing their tax-exempt status—estimated savings of up to $1bn a year. Governor Mike Braun compared hospitals to utilities: "Even if you're conservative, you're going to be interested in regulating a utility."
Vermont's regulator will cap what hospitals can charge for every procedure at a multiple of the rate paid by Medicare. Depending on where the cap is set, savings could range from $9.6m a year (at four times the Medicare rate) to $445m (at twice the rate). Owen Foster, chair of Vermont's health-care regulator, notes there is little market competition in a state with few hospitals and one dominant insurer: "There isn't really that market dynamic that could keep prices in check."
The hospital industry has resisted. Scott Tittle, the president of the Indiana Hospital Association, argues that hospitals are already cutting costs and operating on slim margins, and warns that calculating average prices is not straightforward: "The danger is you start comparing apples to oranges to screwdrivers." Economists warn that caps could threaten innovation or that prices might rise to meet the cap. If caps are set too low, hospital closures could follow.
Bills that would limit hospital charges have recently been filed in states as diverse as Maine, Massachusetts and Oklahoma.
Truly great madness can not be achieved without significant intelligence.