LUGPA Policy Brief:  House Budget Committee Holds Hearing on Skyrocketing Health Care Costs

February 2026 

At-a-Glance

• Issue: Rapid growth in U.S. health care spending and its impact on federal deficits, affordability, and patient access
• Key Themes: Medicare payment adequacy, site-neutral payments, consolidation, prescription drug pricing, workforce shortages, and rural access
• LUGPA Relevance: Independent physician viability, Medicare participation, site-neutral reform, and the effects of consolidation on costs and access
• Bottom Line: Lawmakers across parties agreed cost growth is unsustainable, with emerging bipartisan interest in delivery-side reforms, particularly site-neutral payments, and growing concern about declining provider participation in Medicare

Hearing Overview

The House Budget Committee convened a hearing on January 21, 2026, to examine drivers of rising health care costs and their implications for the federal budget and household affordability. Members broadly agreed that current spending trends are unsustainable but differed on both the causes and policy solutions. Chairman Jodey Arrington (R-TX) emphasized delivery-side cost drivers and market distortions, while Ranking Member Brendan Boyle (D-PA) warned that recently passed House legislation could lead to significant coverage losses and higher premiums, particularly in Medicaid and ACA marketplaces.

Key Issues for Independent Physicians

• Medicare Physician Payment & Access:
  Rep. Jimmy Panetta (D-CA) raised concerns about declining provider participation in Medicare Part B, noting that physician payments have not kept pace with inflation. Dr. Benedic Ippolito (American Enterprise Institute) agreed that indexing physician payments to inflation is a generally reasonable approach to help preserve access to care—an issue central to LUGPA’s advocacy.
• Site-Neutral Payments:
  Chairman Arrington highlighted site-neutral payment reform as an area of potential bipartisan agreement to address delivery-side cost distortions and reduce unnecessary spending, reinforcing momentum around a key LUGPA priority.
• Consolidation & Competition:
  Multiple witnesses pointed to consolidation among hospital systems and insurers as a major driver of rising costs. Witnesses warned that consolidation in metropolitan markets can raise prices systemwide and pressure rural hospitals to sell to large systems, reducing competition and patient choice.
• Rural Access & Workforce Constraints:
  Members emphasized the challenges of access in rural and underserved communities. Witnesses cited workforce shortages, restrictive scope-of-practice laws, and inadequate reimbursement as barriers to care, with several noting that low Medicare payment levels discourage participation and exacerbate access gaps.
• Prescription Drug Costs:
  Witnesses acknowledged that prescription drug spending remains a significant cost driver and called for more targeted and effective reforms, including improvements to Medicare drug negotiation policies, while cautioning against approaches that could limit access to physician-administered therapies.

LUGPA Perspective & Next Steps

The hearing reinforced several LUGPA priorities, including stabilizing Medicare physician reimbursement, advancing site-neutral payment reform, addressing consolidation that disadvantages independent practices, and ensuring cost-containment policies protect patient access. LUGPA will continue to engage with lawmakers and monitor legislative activity as health care cost and budget debates move forward in 2026.