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Yale economist tells Vermont committee rising hospital prices raise premiums, reduce payroll and can raise overdose and suicide deaths
Summary
Zach Cooper of Yale told the Senate Health and Welfare Committee that rising provider prices, not medical quantity, are the main driver of premium growth and that increased prices mechanically reduce payroll and employment outside health care; he said loss of employment is linked in research to higher local overdose and suicide deaths.
Zach Cooper, an associate professor of economics at Yale, told the Senate Health and Welfare Committee that the main driver of health‑insurance premium growth is rising health care spending generated by higher provider prices.
Cooper summarized research showing that hospital concentration and mergers reduce competition, push up negotiated provider prices and pass most of those higher prices on to premiums. He said that in the private market the pass‑through is effectively one‑for‑one: when prices rise, premiums rise the same amount.
More significantly for local economies, Cooper said, rising premiums and employer health costs are paid for largely through worker compensation and employment. When firms cannot reduce wages to cover higher health costs, they tend to reduce payrolls instead; Cooper's research tied higher local health care prices to declines in non‑health employment, reduced payroll, higher unemployment insurance claims and falls in tax revenue.
Cooper described further harms from those employment effects. Drawing on published literature and the team's own analysis, he said job loss is associated with higher short‑term mortality from suicide and overdose; his team's estimates imply measurable increases in overdose and suicide deaths where health care price growth forces layoffs.
He offered policy responses tailored to Vermont's rural market: (1) strengthen competition where feasible, including clinically appropriate regional referral patterns that let planned, high‑cost services be performed farther from home; (2) consider price‑growth regulation or binding price caps where markets lack meaningful competition; and (3) adopt hospital budgets or global‑budget models that smooth price growth, acknowledging that implementation details and transition timing are politically and technically complex.
Committee members asked for Vermont‑specific estimates and for follow‑up materials. Cooper said he would supply additional state‑level figures and that the research shows the effects are concentrated on workers earning below about $100,000 and can increase local inequality.
