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Report Summary
The reputation of the U.S. healthcare system often precedes itself – it is expensive, complex and inefficient. Understanding why begins with the recognition that, regardless of tax status, the “system” is a collection of profit-seeking businesses treating illness – “no margin, no mission” – rather than a thoughtful and comprehensive approach to promoting health.
As a result, the U.S. healthcare system ends up providing poor care to many Americans. Additionally, the staggering $4.9T that is invested into the healthcare “system” crowds out other social investment that might contribute to improved wellbeing.
In economics, value is a measure of the benefit provided by a good or service to an economic agent. For consumer goods, value is ultimately subjective but is shaped by price, quality and convenience. In plain terms, the U.S. healthcare system does not provide good value to patients or society. With the national debt exceeding $35T (or 120% of GDP), the U.S. cannot afford to spend 20% of its GDP on a healthcare system that does not provide demonstrable value for money.
Said differently, the U.S. health care system is at a crossroads. The choice for all health economy stakeholders is whether to implement radical and transformational change from the inside or whether to be subjected to such change by external forces.
Key Takeaways
- Inexplicable price variation contributes to high healthcare costs. Nationally, commercial negotiated rate for four distinct MS-DRGs vary by a factor of 8.5x, on average.
- Upcoding in emergency departments (ED) results in higher spending. From 2018 to 2024, the share of ED visits coded at a higher complexity increased from 36.6% to 47.8% and 27.6% to 31.9%, respectively.
- Inpatient surgical volume is threatened by the proposed IPO List removal. After total knee arthroplasty (TKA) was removed from the IPO list in 2018, inpatient volumes declined by 17.9% from 2017 to 2018, with 2024 inpatient TKA volumes 85.4% below 2017.
- Surgical procedures are imperiled by novel drugs. Between 2018 and 2023, GLP-1 patients increased by 744.6%, while bariatric surgery volume was flat to declining.
- Price and quality for common services are not correlated. While the median negotiated rate for MS-DRG 193 in Miami is $22,255, the provider receiving the highest rate has the sixth-highest mortality rate out of the 15 hospitals.
Methodology
A variety of data sources were leveraged as part of this research, with most insights gleaned from Trilliant Health’s proprietary datasets with visibility into patients, providers and negotiated rates across the country. Trilliant Health’s national all-payer claims database combines commercial, Medicare Advantage, Traditional Medicare and Medicaid claims, providing a nationally representative sample on a deidentified basis. Claims-based data analyses use data through Q4 2024. Trilliant Health’s Provider Directory enables a direct view into providers and their practice patterns, accounting for 5.2M providers, allied health professionals and organizations. The Trilliant Health health plan price transparency dataset is comprised of health plan machine-readable files that have been parsed and cleaned. Trilliant Health leverages its Provider Directory and claims data against the health plan price transparency dataset to reveal the negotiated reimbursement rate between any commercial health plan and any provider for any service rendered at any location.
Additional data were obtained from a variety of publicly available sources (and are noted in respective source notes), including individual health system, health plan and company financial statements, U.S. Census Bureau, KFF, the Congressional Budget Office, American Hospital Association, American Medical Association, Centers for Disease Control and Prevention, Healthcare Cost Report Information System and the Bureau of Labor Statistics.
This research does not include data from self-pay encounters or encounters provided at no cost through commercial insurers that do not generate a claim.
Most data are presented with a national view, while some were exclusively focused on counties or the largest markets – defined as the core-based statistical areas (CBSAs) – to illustrate local variation. Most analyses in the 2025 Trends Shaping the Health Economy Report are limited to the commercially insured population, which generates most of the health economy's revenue.
About the Author
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