Last week, Kansas City officials announced a hiring freeze to address a projected $100 million budget shortfall for fiscal year 2027. When asked about the decision, Mayor Quinton Lucas explained that there is a fundamental “mismatch between income and expenses.” He attributed much of the growing deficit to the rising cost of healthcare for city employees.
At the same time, the federal government remains shut down, with Democrats refusing to vote for reopening it until lawmakers address upcoming Medicaid cuts that they argue will drive up healthcare costs even more for millions of Americans.
According to a recent poll by the Kaiser Family Foundation, six in ten Americans say they are concerned about the affordability of healthcare services and unexpected medical bills, ranking those worries even higher than the cost of housing or food. With annual healthcare premiums often resetting on January 1, those concerns are likely to intensify as many people see the monthly cost of their insurance go up in the coming months.
These rising costs have become one of the few issues that truly unite Americans in frustration. Politicians on both sides of the aisle will point fingers, but the truth is that the causes run far deeper than any single policy or party.
There are a multitude of factors contributing to the escalating costs. An aging population, healthcare workforce shortages, expanded liability risks for providers, and rapid advances in medical technology all play a role. Yet, in my view, the most powerful driver of this crisis is the consolidation of the healthcare industry itself.
This trend has been building for several decades. A November 2024 report from the American Medical Association found that 95% of commercial health insurance markets are now considered “highly concentrated,” and in 47% of those markets, a single insurer controls at least half of the market share. Here in the Kansas City metro, Blue Cross and Blue Shield of Kansas City dominates both the Missouri and Kansas sides, with only limited competition from United Healthcare and Aetna.
The impact of this lack of healthy competition is profound. When just a few insurers control the market, there’s little incentive to negotiate lower hospital rates or reduce premiums. Both provider and administrative costs rise unchecked, creating a marketplace that is profitable for insurers, but increasingly unaffordable for the very people they’re meant to protect.
Many in Washington propose insurance subsidies as a way of lowering the out-of-pocket cost of healthcare to individuals. However, these actions ultimately only mask, rather than solve, the underlying problem. By funneling taxpayer dollars into an already concentrated market, these subsidies help preserve the dominance of large insurers and reduce the incentive for lowering real prices. In effect, they stabilize premiums in the short term while entrenching the very structures that drive costs higher over time.
The only true path to lowering the cost of healthcare lies in restoring genuine competition, making it easier for new insurers, providers, and innovative care models to enter the market and challenge the status quo. Without that, we’re simply paying more to keep a broken system afloat.
(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)