Economic Alliance for Michigan CEO: ‘Health Care Prices are a Hidden Tax on Investment in Business’
Blue Daily
| 4 min read
Research around hundreds of hospital mergers in the United States have shown hospital consolidation leads to higher health care costs and lower quality of care. This doesn’t just affect patients; it has a trickle-down effect on Michigan’s economy. In 2025, 47 cents of every dollar Blue Cross Blue Shield of Michigan collected in members premium dollars went to hospitals.
“The biggest driver of health care cost increases (across Michigan businesses) has been the prices they pay at various hospitals in Michigan,” said Bret Jackson, the president and chief executive officer, Economic Alliance for Michigan (EAM). “The only thing that has been happening in the economy that has a relationship to the hospital prices, has been the consolidation of Michigan hospitals.”
Since 2000, hospital prices have risen by more than 250%, triple the rate of inflation.
“When you only have the one thing to explain what’s been causing the problems, it’s easy to say, ‘well, that must be the reason we are facing the issues we face today,’” he said.
How has hospital consolidation affected Michigan businesses?
Jackson describes health care prices as a “hidden tax on investment in business” in every part of the economy.
Approximately 165 million Americans under the age of 65 had employment-sponsored health insurance in 2023, which is about 47% of the population.
In a May 2025, the Small Business Association of Michigan released a survey sharing 76% of members said the cost of providing health care is affecting their ability to hire more employees, while 51% said they have had to reduce or eliminate benefits due to costs.
Jackson said people aren’t getting the raises they’ve gotten in the past.
“And if they are getting raises, those raises are not keeping up with inflation,” he added. “They have to pay more for health care costs, so people have less money for everything else in their life because they are paying more for health care.”
On top of this, individuals with employee-sponsored health insurance plans are paying more out of their pocket for health care costs related to the higher prices – such as co-pays, deductibles, coinsurances, etc. – because health insurance costs more.
Jackson said businesses are often left with little choice but to share more of those costs with employees.
“They’re not able to invest more in their businesses,” Jackson went on. “They’re not able to expand and grow. They are not hiring more people to do jobs, because attached with that is a benefits package that is now more expensive than it was before. It’s hurting our economy in so many ways.”
How have health insurers responded in different markets to increased hospital consolidation?
Jackson believes insurers have an “extremely difficult job” to set prices. There aren’t as many choices in the marketplace, so insurers can’t negotiate as great of a discount for members due to a lack of leverage.
“We see across the country that where there are more competitive options, the hospitals have the leverage in negotiations, and health plans have to pay a higher price each year,” Jackson said.
Value-based care, which reimburses health care providers for the quality of their work rather than the volume, has proven to make health care more affordable in Michigan, but it’s a model hospital systems have been reluctant to adopt on a large scale.
Jackson said he thinks there isn’t much incentive in the old way of paying for care-where providers are reimbursed for every service regardless of outcome- to fully transition to the value-based care model.
“A true risk-based arrangement that puts (hospitals) on the hook if things don’t go right? They’re not interested, because the current model’s fine and makes them a lot of money,” Jackson said. “Why take risks if they got a payment structure that is benefitting them?”
Finding solutions for Michigan’s economy
The health care system is too complex for any one group to solve affordability alone, but building partnerships that deliver affordable, accessible health care represents a solution. Jackson said hospitals need to be a part of that equation.
“It’s in their best interest to understand that they are pricing themselves out of the market,” Jackson said. “When they price themselves out of the market and private insurers stop covering people, the risk to them financially is even worse than if they keep charging for higher and higher services.”
“Helping people understand that 47 cents on the dollar for your fully insured business goes to hospitals and health systems is a good start, but that doesn’t mean that’s where we have to start,” Jackson said. “We need help with drug costs, we need help with surgeries, we need help with a lot of different parts of the health care delivery system. But starting with that big bucket, that largest bucket that is hospital consolidation – and trying to work affordability in that area while we downstream work in other areas – I think is so important.”
Photo credit: Getty Images
