Health care costs are on the rise. In 1960, the United States spent $9 billion on hospital care. Since then, hospital related spending has grown exponentially. In 2015, the United States spent over $1 trillion on hospital care, with $359.9 billion of those payments coming from the federal Medicare program for the aged and disabled. Researchers have long tried to understand the exact causes of rising health care costs. While many have closely examined the costs associated with population demographics, medical innovation, prescription drug costs, overutilization of services, and fraud or abuse, there is one driving force that does not receive sufficient attention-federal regulatory burden.

Hospitals and other health care providers that participate in the Medicare program are heavily regulated by over thirty different federal agencies. While the primary goal of these regulatory efforts is to protect patient safety and promote access to quality health care services, the burden imposed by these regulatory efforts is both "substantial and unsustainable." One recent report estimated administrative costs, including the costs of adopting and complying with health care regulations, now account for over twenty-five percent of annual hospital spending in the United States, or more than $215 billion a year. Further, a recent study by the American Hospital Association (AHA) noted that "[a]n average sized community hospital now spends nearly over $7.6 million annually to support compliance with ... federal regulations."

Document Type


Publication Date