The economics of the U.S. health care system are broken, according to Paul Markovich, president and CEO of Ascendiun. He argues that controlling costs, rather than relying mainly on larger federal subsidies, is the only sustainable way to make coverage affordable.
Markovich describes meeting a small-business owner in his early 60s whose family premium had risen to nearly $5,000 a month, more than a quarter of his pretax income. The man chose to insure only his wife and two children while hoping to remain healthy until becoming eligible for Medicare.
The example reflects a broader affordability problem. More than 27 million Americans lacked health insurance in 2024, while millions of others had coverage they could not afford to use because of high deductibles. The average annual premium for employer-sponsored family coverage is nearly $27,000.
Markovich says expanding federal subsidies may provide short-term relief but would not solve the underlying problem. He points to federal debt exceeding $40 trillion in August and says that nearly 70% of federal non-interest spending goes toward health care and income support programs such as Social Security.
His proposed solution is to place the entire health care system on a budget. Insurers, providers and other participants would be expected to keep annual cost growth at or below the general inflation rate and would be held accountable for meeting the same target.
One model would be a national office of health care affordability. The agency would require reporting and analyze how prices are set, establish annual cost-growth thresholds, and work with organizations on corrective measures when targets are missed. As a final step, it could impose progressive financial penalties. The system would also need safeguards to ensure savings reduce premiums and out-of-pocket expenses for families, employers and taxpayers.
Markovich points to California as an example. The state’s Office of Health Care Affordability sets cost-growth targets for the health care sector and individual organizations, with fines scheduled to begin in 2028. Its goal is to keep growth near 3%, in line with wages. California is the first state, he writes, to combine cost-transparency requirements with financial enforcement tied to a target, although eight states have established cost-growth targets over the past decade.
The California initiative received support from health plans, labor unions, large employers and consumer groups. Its advisory committee and workgroups continue to solicit input from consumers, insurers, unions, hospitals and physician organizations. Markovich says the approach also emphasizes value-based payment models and investment in primary care.
The plan faces opposition from California’s hospital association, which has sued to block the targets, arguing that they do not account for providers’ actual cost pressures. Markovich says those concerns merit consideration but also support the case for a federal framework, because many of the forces driving costs extend beyond individual states.
Without enforceable limits, he argues, new treatments such as GLP-1 drugs, gene therapies and artificial intelligence could add to spending rather than generate savings. He also says that incentives to provide more services make prevention financially unattractive and leave payment reform incremental.
Markovich concludes that the health care industry must become more efficient by operating within a budget, rather than relying on additional public spending to absorb rising costs.
Sources: STAT News.