💡 What’s Happening?
In 2023, the Texas legislature passed House Bill 711, which banned certain contracting clauses between providers and insurers. One exception: all-or-nothing clauses, which allow hospitals or health systems under common ownership to negotiate a single contract for all of their facilities with a health insurance company. Many major hospital systems offer essential services through hundreds of facilities statewide. Without it, more negotiating power would be shifted to insurers and hospitals would have to negotiate dozens – or even hundreds – of individual contracts, accepting some locations while excluding others, making it harder to maintain strong provider networks and protect access to care.
As the conversation continues, one question remains: Who is best positioned to protect patients’ interests when hospitals and insurers come to the negotiating table – and what role should government play in that process?
🃏 Showing Hands
Supporters of additional contracting restrictions argue they would give insurers greater flexibility to build networks around lower-cost providers, increasing competition and reducing premiums.
But Texas’ commercial insurance market is already highly concentrated. Eliminating all-or-nothing contracting would further strengthen insurers’ leverage while making it harder for hospitals – particularly smaller and rural systems – to negotiate comprehensive network agreements that preserve patient access.
“Several companies may be selling health insurance in a given market, but, as we previously reported, most people usually enroll with one of a small number of insurers. Known as market concentration, this can result in fewer choices of insurers and higher premiums due to less competition in the market. Market concentration generally increased from 2011 through 2022, with three or fewer insurers holding at least 80% of the market share for the individual and employer group markets in at least 35 states.”
U.S Government Accountability Office: Private Health Insurance: Market Concentration Generally Increased from 2011 through 2022
“For combined insurance products (e.g., PPO, HMO, point of service, and marketplace exchange plans), Health Care Service Corporation (HCSC) – which oversees Blue Cross and Blue Shield of Texas – holds a plurality or majority share in each of the 26 Texas metro areas identified, from 37% in Austin-Round Rock-San Marcos to 74% in Abilene.
…‘What we see again this year is clear,’ wrote John Whyte, MD, AMA’s CEO and executive vice president, in the report introduction. ‘Across the country, the vast majority of health insurance markets remain highly concentrated. In many communities, just one or two insurers hold outsized market power. When that happens, patients, employers and physicians feel the consequences – higher premiums, fewer choices, and lower physician earnings and employment.’”
Texas Medical Association: One Insurance Company Holds Majority Share of Texas Market, Per AMA Study
⚖️ Fair Play
THA has consistently maintained that contract negotiations should remain balanced and that government should avoid tipping negotiations toward one side.
Don’t be fooled by language that promises greater flexibility or rewards for “shopping smart.” Healthcare decisions are rarely as simple as choosing the most affordable option. Patients and families facing emergencies, chronic illness or specialized treatment don’t always have the ability – or time – to comparison shop providers.
It would be more than frustrating to have to learn which individual grocery store in a chain accepted a particular credit card – patients deserve to expect if a hospital in a health system is in network, so are the rest of the system’s facilities. Strong hospital networks remain critical to ensuring patients receive the care they need, when they need it.
🎰 An Expensive Gamble
Giving insurers greater leverage in contract negotiations may promise lower prices in theory, but the long-term stakes are much higher.
Major health insurance companies already successfully negotiate with nearly every hospitals in Texas, while many patients continue to struggle with limited coverage options and network restrictions. Because a small number of insurers cover such a large share of Texans, hospitals often have limited alternatives at the negotiating table. Removing all-or-nothing clauses and repealing network adequacy requirements makes access to care – not just affordability – the issue at stake.
Understanding both perspectives in the negotiation will be essential when advancing solutions intended to lower costs while maintaining reliable access to care.
“The Texas Department of Insurance (TDI) testified in 2023, prior to the passage of the bill, that more than 90% of insurers’ health plan networks in the state did not meet the statutorily mandated network adequacy standards. …Plans in Texas that serve urban areas couldn’t make patients travel more than 30 miles for primary or general hospital care or more than 75 miles to see a specialist or receive specialty hospital care. Rural patients had a 60-mile limit for primary and general hospital care.
…Nevertheless, health plans were constantly filing waiver requests with the TDI claiming that for various reasons they couldn’t meet those requirements, and the TDI routinely approved the waivers – until the 2023 law went into effect. …As a result, the TDI began denying some of the waiver requests from the state’s insurers – and that has upset the insurance industry so much that the Texas Association of Health Plans (TAHP) filed a lawsuit to stop TDI from doing what the 2023 law requires.”
HEALTH CARE un-covered: Texas Tried to Enforce Basic Network Standards — The Industry Ran to Court to Stop It
“Some insurers added that federal regulatory changes contributed to their requests for higher premiums. For example, they said new enrollment and eligibility requirements instituted by the Trump administration could affect the overall population of ACA enrollees. While Affordable Care Act enrollees make up less than 10% of the population, similar cost drivers are likely to make other private plans, including employer-sponsored plans, pricier too, according to KFF’s analysis.”
ABC 10 News: Obamacare premiums surged this year. A new analysis shows it’s likely to happen again in 2027
⭐ For hospitals, the conversation extends beyond individual contract provisions. It is about preserving fair negotiations that support stable provider networks and ensure Texans continue to have access to the hospitals and services their communities rely on.
📖 Learn More
Keep Hospital In-Network and Preserve Patient Choice
The Texas Tribune: Rising healthcare costs are straining Texas businesses as the Legislature seeks solutions
