How insurers drive up health care costs and undermine patient care
Every year, the Centers for Medicare & Medicaid Services (CMS) changes the fees it pays doctors for treating Medicare patients. For private practitioners, these discounts mean tight budgets and tough choices. By 2025, physician reimbursement is set to decrease again. But CMS isn’t the only one driving these changes — commercial insurers are following CMS’ lead, turning the ripple effect of these cuts into a wave reshaping health care across the country. This constant downward pressure is not only a hindrance to doctors; it is a growing problem for every patient, family and society.
Physicians rely on CMS payments to contribute to their fixed costs, but they also rely on private insurance reimbursement to keep the system going. CMS sets a “fee schedule” for each medical service, which tells how much doctors are paid for Medicare patients. However, many private entrepreneurs follow this fee schedule as well, effectively submitting their decisions to CMS. So, when CMS cuts payments, insurers tend to cut their rates, paying doctors even less. This is not just a policy decision; it’s an industry-wide shift that leaves doctors struggling to cover the cost of providing care to all patients, not just those with Medicare. Over time, this trend pushed independent practices to the limit, making it difficult—if not impossible—for small practices to survive, especially in rural areas.
Running a medical practice is not just about treating patients; it is also about managing overhead costs, staff, equipment and rent. Private practitioners, especially in small practices, bear the brunt of these reimbursement deficits. Unlike large hospital systems, private practices do not have the same bargaining power or financial resources to withstand fee cuts. As a result, many doctors are left with no choice but to sell their practices to hospital chains or, worse, directly to insurance companies. This is not just a loss for doctors—it’s a loss for patients as well.
According to the American Medical Association, in recent years, the number of private practices has decreased significantly, and many doctors work for private organizations. When insurers and hospitals buy these systems, it creates less choice for patients and ultimately leads to higher costs. With the exception of small, independent practices, the health care space continues to be dominated by a few large players who control prices and patient care decisions.
As insurers and hospital systems control more medical practices, they control more of the health care market. This consolidation reduces competition, giving these large corporations the power to dictate prices with little responsibility. A report by the National Library of Medicine shows that when competition goes down, prices tend to go up. For patients, this translates into higher medical bills, even though the quality of care does not improve.
But there is more. Physicians operating under these large systems may be pressured to achieve high productivity, pushing for as many patients as possible to make money. This collaborative approach to health care limits the amount of time doctors can spend with each patient, resulting in rushed visits and, ultimately, poor quality care. For patients, this means less personal treatment and less trust in the system that should take care of their health.
This cycle of decreasing physician reimbursement is creating a health care system where physicians are increasingly employees of organizations with little freedom to put the needs of the patient first. And the results are clear: Doctor fatigue is increasing.
Studies show that doctors who face financial and business pressures are more likely to experience job dissatisfaction, burnout, and even make medical errors. In some cases, this pressure puts doctors out of work altogether, leaving the population—especially rural and underserved—with fewer health care providers.
For patients, this means less access to experienced, dedicated doctors who know their community. It also means dealing with big, faceless companies when looking for health care. What was once a career focused on relationships and personal care is now becoming a business meeting line. When insurers order care based on profit mechanisms instead of the patient’s health, the quality of our health care suffers.
The cycle is clear: When CMS lowers reimbursement rates, insurers follow suit, and the resulting loss of competition increases costs for everyone. Instead of reducing fees frequently, policymakers should consider reforms that support independent practices. Strengthening reimbursement rates as done by hospitals to match the rate of inflation can help ensure that small practices can survive, maintaining choice and competition in health care markets. Protecting independent physicians isn’t just about helping doctors—it’s about ensuring that patients have access to affordable, quality care in a system that values their health over commercial profit.
By addressing these issues now, we can help build a healthcare system that puts patients first, supports independent practices, and ensures that doctors—not insurers—are accountable for care. patients.
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