For decades, researchers have reached the same conclusion: Americans spend more on healthcare mainly because they are getting charged more for the same amount of care, not because patients use substantially more care. New federal data has prompted questions about whether that conclusion is changing. Texas 2036’s report, Prices Versus Utilization, explains why it is not.

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.

Recent federal data appeared to show medical prices stabilizing. Yet those measures only track the same provider charging the same billing code over time. They often miss the ways healthcare becomes more expensive for families without showing up as a traditional price increase. For example:

• A provider bills a routine office visit as a more complex service.
• A hospital system buys a physician’s practice, and the same visit suddenly includes a facility fee.
• A health system steers patients to its own higher-cost facilities.

The listed price may never change, but the patient’s bill still grows. The industry has gotten better at raising what patients pay without calling it a price increase.

These patterns point to one conclusion: prices, not utilization, remain the core problem.

And that is precisely why who directs a patient’s care matters so much. Prices for the same service vary enormously from one provider or setting to the next. When the problem is price rather than utilization, the choice of where a patient is treated often shapes the final bill more than how much treatment they receive. This is what makes steering so powerful. When an employer or insurer can direct a patient toward a lower-price provider of comparable quality, spending falls without anyone getting less care. In a system where price variation, not overuse, is doing the damage, steering is one of the most direct tools available for holding prices down.  

A hospital system or insurer that owns providers can just as easily steer patients into its own higher-priced facilities, turning a cost-control tool into something that drives up prices. The question is not whether to permit steering, but whom it is designed to serve.

Texas has already taken a step toward addressing one piece of it — HB 711 bars providers from imposing contract terms that promote anti-competitive practices and SB 926 requires insurers to act as fiduciaries, steering for the enrollee’s benefit rather than their own. Extending a similar duty to physician referrals would close the other half of the gap.