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What KFF found
The May 18 analysis by Jamie Godwin and Zachary Levinson uses the Bureau of Labor Statistics producer price index for hospitals. Private and Medicare prices grew at similar rates in the first year. From April 2020 through April 2025, private prices rose faster every year. In the latest year, through April 2026, private prices grew more slowly than Medicare. Figures for early 2026 are preliminary.
The authors point to several drivers. Hospital contracts with insurers are renegotiated periodically, so pandemic-era cost increases may have reached commercial prices with a lag. Medicare’s annual updates were held down by inflation forecasts that came in low, notably for 2022, by ACA productivity adjustments and by the return of sequestration. KFF also links higher prices to consolidation: in 2024, one or two systems controlled at least 75% of inpatient care in 83% of metropolitan areas.
Why hospitals will hear about it
Hospitals account for nearly a third of national health spending and 40% of spending growth from 2022 to 2024, according to the brief, and private insurers already pay roughly double traditional Medicare rates for hospital services on average. The analysis gives employers, insurers and legislators a recent, easy-to-cite number. Indiana has enacted a law that will eventually cap private prices at nonprofit hospitals, and Oregon has held its state employee plan to 200% of Medicare since 2019.
Hospitals have a case to make as well. The same brief notes that Medicare updates underestimated inflation in some years, most notably 2022. Leaders should be ready to present that case with their own cost data, not general assertions.
Preparing for the conversation
- Know your commercial-to-Medicare price ratio by major payer and how it compares with your market.
- Explain recent price increases in terms of specific cost drivers such as wages, drugs and supplies.
- Track price-cap proposals in your state legislature and among large self-insured employers.
- Before any merger, expect regulators to raise this kind of analysis alongside market concentration data.
Archive entry for May 19, 2026, added Nov. 11, 2026.