The title for this paper comes from a quote that Winston Churchill is purported to have said, “Americans will always do the right thing, only after they have tried everything else.” This paper argues that hospital price growth has suppressed wage growth and crowded out resources for other needs. These circumstances have resulted in what amounts to a regressive transfer of hundreds of billions of dollars annually from American workers to hospital systems. We argue that this situation has persisted for decades and will continue without policy intervention. This paper makes the case that mandatory state-based hospital rate-setting models offer the best prospect for meaningful cost containment and asks if states are ready to implement these models.

The paper is part of a series of materials regarding state-based hospital rate setting models prepared through a research grant by Arnold Ventures to help states develop regulatory models to better control high and rapidly rising hospital prices paid by for care delivered to commercially insured patients.

Additional materials in this series include a manuscript entitled “U.S. State-Based Hospital Rate Setting: What Worked, What Didn’t, and What We Need to Do Now”, which describes the history of state-based rate setting in the U.S. from the 1970s to the present, and the “Rate Regulatory Handbook: A Guide for State Implementation of Cost Constraint Models”, which provides a guide state regulators in their efforts to initiate and operate a state or regional hospital rate setting system with participation and compliance enforced by law and regulation.