Patient Price Visibility and Provider Competition Could Lower Healthcare Costs

Scott Atlas frames the central problem as a market failure: patients are largely disconnected from the price of care, while regulations restrict the number and kinds of providers who can compete for their business. His objective is not merely to spend less. It is to lower medical prices without reducing access, quality, or innovation.

Insurance design is central to his argument. When coverage begins paying after a low deductible, Atlas says, a patient has little reason to distinguish between a $1,000 service and a $10,000 one. He uses a $200 deductible to illustrate the point: once insurance covers the expense, the patient has little direct financial reason to care what the service costs. Yet the patient, rather than the insurer, bears the consequences of poor access and poor outcomes.

His alternative is not the elimination of insurance. He favors making high-deductible coverage available, alongside substantially more liberal health savings accounts that let people pay routine expenses with tax-sheltered funds. High-deductible plans cost less, he says, while HSAs give consumers funds to cover the expenses for which they would otherwise pay directly.

Atlas also favors removing insurance mandates that force people to buy coverage they may not want, and changing tax rules that, in his view, make spending a dollar on healthcare artificially more attractive than spending that dollar elsewhere. The intended result is a consumer who has both the incentive and the means to seek value rather than receiving care through an arrangement purchased and priced by third parties.

The practical objection is obvious: a patient having a heart attack in an ambulance cannot compare clinicians or negotiate a price. But Atlas maintains that emergencies account for a limited share of healthcare expenditures and should not define how the rest of the system operates.

A chart he displayed separated care for people under and over 65. Its point, in Atlas’s telling, was that most outpatient care is scheduled, and that a substantial portion of inpatient care is scheduled as well. Even among the highest-spending 1% of healthcare users, he says, roughly 40% of care is scheduled. For scheduled care, patients have time to ask about qualifications, compare providers, and determine what treatment costs.

Healthcare often reverses that order: the service is delivered first, then the patient receives a bill that Atlas describes as both late and indecipherable. Price information cannot shape a choice once the choice has already been made.

Atlas used results on MRI services and outpatient surgery to argue that shopping can materially affect prices. In the comparisons he presented, competition associated with shopping for care produced almost a 20% cost reduction over two years. His claim is not that every medical decision should be governed by price alone. It is that much of the care patients actually use is schedulable and could be subject to competition on price and quality if usable information were available before treatment.

Supply restrictions are the other half of the problem in Atlas’s account. He describes American medicine as a deliberately restrictive system: medical-school graduation rates have stagnated for 40 years, specialty-training positions are tightly controlled, and physicians who move states or practice telemedicine must seek separate licenses in each jurisdiction. Recalling his time running a subspecialty program at Stanford Medical School, he says it took four years to add one training position despite what he describes as a nationwide physician shortage.

He calls state-by-state licensing archaic and anti-competitive, arguing that physician standards do not differ enough among states to justify separate licensing regimes. He favors federal licensing.

The same critique extends to scope-of-practice restrictions for nurse practitioners and physician assistants. Atlas distinguishes routine care—ear infections and high blood pressure—from complex procedures such as brain-tumor surgery. For routine cases, he says, those clinicians produce equivalent outcomes at costs 30% to 40% lower than physician-delivered care and 80% lower than treatment through a hospital emergency room. Restrictions on these clinicians, he argues, protect physicians from competition rather than patients from inadequate care.

Atlas treats Medicaid as the clearest distinction between insurance coverage on paper and the ability to obtain care in practice. He calls it a separate and substandard system for poor Americans, and argues that politicians should not celebrate expanding it while declining to use it for their own families.

In his account, the Affordable Care Act pursued two goals: reducing healthcare costs through added regulations and taxes, and increasing the number of insured Americans. The coverage expansion came primarily through Medicaid. Atlas says roughly three-quarters of newly insured people entered the program.

That figure does not establish access, he argues. Citing Department of Health and Human Services data from 15 major metropolitan areas, Atlas says about half of physicians did not accept new Medicaid patients. Of physicians with contracts to accept Medicaid, he says, about half still refused new patients.

Atlas also refers to a randomized comparison in which some uninsured people were enrolled in Medicaid while a matched group remained uninsured. He says Medicaid did not improve health beyond having no insurance in that trial. He further cites controlled studies comparing Medicaid patients with privately insured patients across surgeries, cancer care, cardiac procedures, and transplants. Those studies, he says, found worse outcomes for Medicaid patients even after accounting for patient characteristics: longer care, higher hospital costs, and, in one surgical comparison, twice the in-hospital mortality of privately insured patients.

His explanation is that authorizing payment for a drug, hospitalization, or procedure does not itself produce effective care. Patients may still struggle to find a provider or receive timely treatment. Enrollment is easy for politicians to count, he argues; medical benefit and access are harder to establish.

Atlas proposes turning Medicaid into a bridge to private insurance rather than retaining it as a permanent parallel system. He places that proposal within a broader choice between two models. Medicare for All, single payer, and a public option, in his description, expand government authority over insurance and prices while further weakening patients’ direct concern for cost. Consumer-driven healthcare would instead remove rules that shield patients from prices and restrict competition among providers.

Private insurance now pays providers roughly 1.5 to 2.5 times Medicare payment rates, according to Atlas. That disparity is the premise of his objection to Medicare for All: private payments, he says, cover the gap left when Medicare and Medicaid reimburse less than the cost of care.

Without private insurance, Atlas argues, hospitals and other providers would lose the revenue that supports care for publicly insured patients. He says half of hospitals already operate at a loss. His presentation also cited projections that, by 2040, half of hospitals, two-thirds of nursing facilities, and more than 80% of home-health agencies would effectively be unable to operate at Medicare payment levels.

On that premise, Medicare for All would not simply extend existing Medicare coverage to everyone. It would destabilize the provider base on which current Medicare beneficiaries depend.

Atlas also points to supplementary private coverage. About 20% of people are on Medicare, he says, but only 20% of Medicare participants rely on it alone; the other 80% supplement it with private insurance. He presents that reliance as evidence that Medicare by itself is insufficient for many beneficiaries.

He identifies a related irony in centralized systems abroad. England, Sweden, Denmark, Finland, Ireland, Italy, the Netherlands, Norway, and Spain, he says, spend taxpayer money on private care because their public systems cannot meet demand. Public financing, in his view, does not remove the need for private capacity; it can continue to rely on it.

Prescription drugs account for roughly 15% to 20% of healthcare spending, Atlas says, making them an important but not dominant share of total costs. Pharmaceutical pricing nonetheless concentrates many of the same problems he identifies elsewhere: opaque intermediaries, weak consumer incentives, and limits on competition.

He says developing a new active substance now costs about $2.5 billion and takes nearly 15 years. Those development costs help explain high drug prices, in his account, but pharmacy benefit managers add another layer of complexity. Atlas says data show that about 20% of the time a patient’s insurance copay is higher than the cash price for the same prescription at the pharmacy. He further says pharmacy-benefit-manager gag clauses prevent pharmacists from telling patients when paying cash would be cheaper.

His own cholesterol prescription illustrates the incentive problem. The retail price billed to his insurer was $31, he says, while his out-of-pocket cost was zero. A patient who pays nothing has little reason to search for a better price, even when prices differ sharply.

Atlas displayed Consumer Reports data showing sixfold to 20-fold price differences for the same common generic drugs within the same cities; another comparison showed differences of ninefold to 17-fold. He presents that variation as evidence that transparent pricing could produce significant savings for patients able to act on it.

Generic drugs show what competition can do, he argues. They make up about 90% of prescriptions, and he says introducing two competing generic drugs reduces the average generic price by 50%.

Atlas does not treat drug policy as a simple case for government-imposed lower prices. The policies associated with faster drug launches—including less price regulation and stronger patent rights—are also associated, he says, with higher prices. That is the tradeoff: the expected returns that support research and launches can burden current buyers.

For that reason, he opposes drug-price caps, including measures pursued by the Trump administration. Price controls, he says, delay launches, diminish research, and reduce the number of drugs developed; the value of new medicines exceeds the savings from controls in his view. His preferred approach is to facilitate competition, potentially through selective import reforms. But he warns that importing lower-priced drugs from countries with price caps can also import the price-control regimes behind those prices.

Atlas separates healthcare delivery from the broader causes of poor population-health measures. Life expectancy at birth is often used to criticize American medical care, he says, but it is a heterogeneous statistic shaped by factors beyond the healthcare system.

His presentation paired life-expectancy data with an inverse comparison of obesity among people age 15 and older. The patterns across countries looked close to reversed, he says. Atlas argues that obesity alone reduces life expectancy by eight to 10 years, and by six to seven years when measured from age 40. It is a major risk factor, he says, for stroke, heart disease, and cancer.

Atlas criticizes what he regards as a cultural failure to communicate those risks, including the portrayal of obesity in fashion and advertising. He describes demand for GLP-1 drugs as an implicit acknowledgment that obesity is harmful despite messages suggesting otherwise.

He also cites a 2024 paper which, he says, attributed 40% of U.S. cancers and 44% of cancer deaths to personal lifestyle risks: smoking or smoking history, obesity, and alcohol abuse. Smoking remains consequential long after a person quits, he notes. Atlas’s own calculation is that obesity alone accounts for nearly 40% of the life-expectancy difference between the United States and most other countries. That excludes other factors he says are unusually prevalent in the U.S., including homicide among young people, which has an outsized effect on life expectancy because it ends lives early.

The distinction matters to his larger case. High spending and weaker life expectancy cannot, in his account, be treated solely as failures of medical care when major drivers of illness and early death arise before a patient reaches a clinic.