A new report from the White House Council of Economic Advisers (CEA) estimates that prohibiting specific contractual clauses between hospital systems and health insurers could reduce national healthcare costs by approximately $45 billion annually. The analysis, released on June 18, suggests that banning “anti-steering,” “anti-tiering,” and “all-or-nothing” contract provisions would increase market competition, lower inpatient prices by an estimated 18 percent, and decrease family insurance premiums by roughly 7 percent.
These contractual restrictions currently prevent insurers from steering patients toward lower-cost, high-quality providers or creating benefit tiers that incentivize efficiency. By eliminating these barriers, the administration aims to lower costs without implementing federal price controls. “The Council of Economic Advisers’ findings reinforce that the administration is delivering meaningful cost reductions for American patients,” a White House spokesperson stated on June 19, emphasizing a preference for market-driven solutions over increased government spending.
The Impact of Restrictive Hospital Contracts
At the center of the debate are three specific types of clauses that healthcare economists argue suppress competition. Anti-steering clauses prevent insurance companies from guiding patients toward more affordable or efficient providers, even when data suggests those providers offer better value. Anti-tiering clauses similarly restrict insurers from placing hospitals in specific benefit categories that would otherwise lower patient out-of-pocket costs. Finally, “all-or-nothing” or bundled contracts require insurers to include every hospital and physician within a specific system in their network, effectively removing the ability to negotiate rates with individual facilities independently.
According to the Council of Economic Advisers, the removal of these provisions could lead to significant financial relief for both families and businesses. The report projects that the average family could save roughly $1,800 annually on premiums. Furthermore, the analysis indicates that inpatient prices could drop by approximately $4,100 per admission in markets where these restrictive clauses are currently prevalent. By allowing insurers more leverage during contract negotiations, the report anticipates an 8 percent reduction in prices, with additional savings driven by improved patient management and increased competition among lower-cost healthcare providers.
Legal Precedents and Ongoing Enforcement
Federal authorities have increasingly utilized antitrust law to challenge these contractual arrangements. On June 18, the Department of Justice (DOJ) announced a settlement with OhioHealth, which resolved a civil antitrust lawsuit filed in February. Under the terms of the agreement, the hospital system is prohibited from utilizing anticompetitive clauses that restrict insurer competition, though the settlement included no admission of wrongdoing. “This Department of Justice will not tolerate corporate prioritization of revenue in contravention of our antitrust laws,” Associate Attorney General Stanley Woodward said in a statement regarding the department’s enforcement actions.
The DOJ is also pursuing litigation against New York-Presbyterian Hospital, a case filed in March that remains pending in court. The government alleges that the hospital system’s contracts insulate it from price competition, thereby artificially inflating healthcare costs for local residents. These actions mirror the 2022 settlement with Sutter Health in Northern California, where the health system agreed to pay $575 million in penalties and change its contracting practices to settle allegations of anticompetitive behavior. The success of that settlement is frequently cited by administration officials as a model for future national policy.
Legislative Pathways and Future Policy
While the administration pursues regulatory and legal strategies, congressional lawmakers are also exploring legislative remedies. Representative Jodey Arrington (R-Texas) has introduced the Healthy Competition for Better Care Act, which seeks to codify a federal ban on these specific anticompetitive clauses. Several states, including Connecticut, Massachusetts, and Texas, have already implemented varying degrees of prohibition against such contract provisions, though the effectiveness and scope of these state-level mandates remain inconsistent across the country.
The administration’s focus on these contract reforms is part of a broader healthcare agenda aimed at addressing the root causes of medical inflation. Officials continue to evaluate a national framework that would standardize these prohibitions, ensuring that insurance providers can effectively manage costs and improve patient outcomes. As federal legal proceedings against major hospital systems continue and legislative discussions regarding the Healthy Competition for Better Care Act progress, stakeholders expect further administrative guidance on the implementation of these competitive standards.
For updates on federal antitrust proceedings and potential legislative hearings, interested parties should monitor the official websites of the Department of Justice Antitrust Division and the U.S. Congress. Readers are encouraged to share their experiences with healthcare costs or join the discussion in the comments section below.