This is a preview of our Texas 2036 newsletter diagnosing the root causes of rising prices in Texas’ healthcare market. To receive this weekly look at our work, sign up here.
When Healthcare Prices Increase, Every Texan Pays
The 2025 average annual premium for a family of four with employer-sponsored health coverage comes to nearly $27,000. That’s about a third of the median Texas household income.
Every dollar Texas families spend on healthcare is a dollar that can’t go toward housing, groceries, childcare or college savings.
It’s not just families feeling the pressure.
- Employers face higher insurance costs that make it harder to raise wages and invest in growth.
- Local governments are seeing healthcare costs consume larger portions of their budgets.
- School districts and the state are paying more to insure public employees.
Why Texans Are Feeling the Pressure
Nearly 9 in 10 Texans are concerned about healthcare prices, and 63% have delayed or skipped care because they couldn’t afford it.
Those numbers stand as a direct result of our Texas healthcare market not functioning effectively.
Healthy markets give consumers the information they need to make good decisions, encourage competition that rewards value and hold participants accountable for results.
While we have made progress on providing more transparency and information, Texas’ healthcare market has plenty of work to be done in all three areas. The effects are showing up across the state.
Healthcare Prices: Impacts Seen Statewide
- Private sector: Rising premiums are squeezing Texas employers and workers alike, according to the Texas Tribune.
- County government: Travis County has watched its employee health insurance costs climb.
- City government: Dallas is facing higher healthcare spending, driven in part by demand for new weight-loss medications.
- Local School Districts: El Paso ISD, a school district that runs their own health benefit plan, recently increased health insurance premiums for some employees and their families.
- State: Texas teachers saw their TRS-ActiveCare health insurance premiums rise an average of 10% last school year and face another increase this coming year, cutting into the salary raises the Legislature funded through the Teacher Retention Allotment in the 89th session.
Texas 2036’s new report, Prices Versus Utilization, examines what’s actually driving increases in healthcare spending and identifies practical reforms that can make the market work better for patients, employers and taxpayers.
By the numbers
- 14%: How much physician charges rise after a hospital buys a practice, with about half of that traced to facility-fee rules rather than any change in care. Same doctor, same room, higher bill.
- 17%, up to 61%: How much more UnitedHealth pays its own Optum-affiliated physicians than comparable outside doctors, widening to 61% in markets where it controls at least 25% share. A price gap driven by who owns the provider, not by the care.
- 31% → 43%: The share of office, urgent-care, and ED visits billed at higher complexity Level-4 codes, climbing every year from 2012 to 2023 — higher-paying codes for the same visits, well before AI billing tools.
Symptoms Of An Unhealthy Market
Some economists argue Americans simply use too much healthcare. But growing evidence suggests the larger issue is how healthcare markets function and the prices patients ultimately pay.
Recent CMS data suggest that measured medical prices have stabilized — but that measure tracks only what providers charge for a given code, not what patients ultimately pay.
For example:
- A routine office visit is billed as a more complex service.
- A physician’s practice is purchased by a hospital system, and the same visit suddenly includes a facility fee.
- Patients are referred to higher-cost facilities owned by the same health system.
In each case, the listed price may not change, but the patient’s bill does.
These examples point to a larger problem: Instead of being based on value and quality, prices increasingly reflect market power, limited competition and a lack of transparency.
🔎 At Texas 2036, we believe a healthier healthcare market must be informed, competitive and accountable. Our research and policy recommendations focus on strengthening each of those pillars. Learn more.
Symptom No. 1: Patients Aren’t Informed
Healthy markets depend on informed consumers. But in healthcare, patients, businesses and state agencies often lack the information they need to make informed decisions.
Patients may not know who owns their physician’s practice, whether a routine visit will include a facility fee or what they’ll ultimately pay until the bill arrives.
That lack of transparency makes it harder for families to compare options and plan for expenses. It also limits the ability of businesses and state agencies to design health benefits that balance price, quality and value.
Texas 2036: Improving Transparency
Texas 2036 testified before the House Insurance Committee in support of reforms that would:
- Require providers to give written notice before charging a facility fee.
- Expand billing honesty standards so payers can pay what is owed — and only what is owed — more quickly and efficiently.
Symptom No. 2: Competition Is Weakening
Competition helps keep prices in check and encourages innovation. But across the country, healthcare markets have become increasingly concentrated, leaving patients, employers and insurers with fewer choices.
By the numbers:
- 69% of hospitals now belong to a larger health system, up from 56% in 2010.
- A 2025 federal review found hospital mergers can increase prices by 6% to 65%, with the largest increases occurring in the most concentrated markets.
- In 47% of U.S. metropolitan areas, one or two health systems control inpatient hospital care, including nine metro areas in Texas.
Texas has already taken steps to curb anti-competitive contracting practices, including reforms passed in HB 711 (2023). At the time, this was the most substantial state-led reform on the topic. Building on that progress, Texas lawmakers have an opportunity to continue to set a nationwide example by:
- Closing loopholes that allow “all-or-nothing” contracting.
- Prohibiting contracts that allow dominant health systems to guarantee a preferred tier in a health plan, even if their services are not the best value.
- Improving transparency around ownership and control to prevent corporate and private equity influence on medical determinations and treatment.
- Strengthening oversight of mergers and acquisitions to prevent market consolidation where it hasn’t already occurred.
Symptom No. 3: Accountability Is Missing
Healthy markets work best when incentives reward value and good patient outcomes.
In healthcare, however, patients, employers and taxpayers often bear the financial burden while providers, insurers and other participants respond to payment systems that don’t always reward high-quality, affordable care.
Smart, value-based outcomes are frequently prevented due to anti-competitive restrictions imposed by dominant healthcare companies. When incentives are misaligned, healthcare becomes more expensive without necessarily improving outcomes.
Texas Can Lead By Example
As a major purchaser of healthcare through the Employees Retirement System of Texas (ERS) and Teacher Retirement System of Texas (TRS), Texas can use its purchasing power to achieve better value. Expanding value-based purchasing and aligning benefits around quality, efficiency and patient outcomes could lower costs and provide a model for other employers.
TRS-ActiveCare shows why this matters. Texas teachers have seen rising health insurance premiums, with a near 10% statewide average increase last school year, and another expected increase this school year, driven in part by rising healthcare prices.
Texas can lead by improving its own state health benefit plans, creating a proof of concept for private employers, school districts and local governments that they can replicate as they tackle the same healthcare pricing issues.
Why Texas 2036 Is Focused On This Work
Healthcare affordability affects more than medical bills. It impacts workforce participation, business competitiveness, local government budgets and Texas’ long-term economic success.
That’s why Texas 2036’s recommendations focus on practical, bipartisan reforms that improve transparency, strengthen competition and increase accountability. Our healthcare system should reflect the same principles that have helped Texas build one of the nation’s strongest economies.
With interim discussions underway in the House Select Committee on Healthcare Affordability and the Senate Health & Human Services Committee, lawmakers have an opportunity to advance these reforms in the 2027 legislative session.
Have you received a surprise medical bill or struggled to understand the price of care?
We’d like to hear your story. Share your experience here.
