At a glance:
- LD 2196 would stop hospitals from raising prices too fast, saving Mainers about $203 million over five years
- Almost half of Maine families are in medical debt, mostly from hospital bills, which have gone up 3.5 times faster than everyday costs over the past 20 years
- The law would also make sure more money goes to basic and mental health care, so it’s easier for people to see a doctor and stay out of the hospital
Hospital costs account for 39% of all health care spending in Maine, and hospital expenditures have risen three-and-a-half times as fast as the cost-of-living over the past 20 years. A little under half of Maine families have medical debt, the vast majority of which comes from hospitals. This debt weighs down our economy as well as hurting families, making it harder for them to do everything from affording basic expenses to going to college or starting a business.
Maine’s Joint Standing Committee on Health and Human Services recently voted to advance a bill to curb the growth in hospital prices, a move that could save taxpayers and premium-payers tens of millions of dollars each year.
LD 2196, “An Act to Lower Health Insurance Costs, Reduce Barriers to Health Care and Ensure Fair Prices for Health Care,” would tie the prices that hospitals charge certain insurers, including the State of Maine Health Plan, to increases in the rates Medicare pays for certain services. Many hospitals will have future price increases limited to the increase in the Medicare rate but any rural hospitals whose prices are already low can increase prices by 1% above the increase in the Medicare rate.
Hospitals opposed the original version of the bill — which would have capped current prices as well as limit future price increases — saying the price caps would impose immediate dramatic cuts to the costs they could charge for certain procedures. By limiting future price increases, the bill will still save patients and taxpayers money while being more manageable for hospitals.
According to Maine’s Office of Healthcare Affordability, the bill would result in $227 million in savings between 2027 and 2031, including $45 million in savings to the state health plan, which is financed directly by Maine taxpayers, and $182 million in savings to other insurance plans, which insurers are required to pass onto consumers under the Affordable Care Act’s limits on insurer profits.
The bill’s provisions would apply to around 10% of Maine’s insurance market. In addition to state employees, the bill would apply to plans in the state’s individual and small group markets. The State does not have the authority to regulate employers who choose to “self-insure” (where the employer bears the risk of health care costs rather than the insurance company).
These savings are partly offset by the bill’s other requirements for insurers to pay minimum rates for certain services, including primary care and behavioral health. This will make it easier for Mainers to see a provider that offers these foundational services. Over the next five years the bill would increase spending in these areas by $23.8 million, leaving net savings of $203 million.
To keep costs within the limits prescribed by LD 2196, Maine’s hospitals need to look at making their operations more like hospitals in other countries — focusing on delivering care more efficiently and cutting back on expenses that do little to improve patient experience. This could mean streamlining administration, spending less on advertising, replacing equipment less often, or cutting executive salaries.
The amended version of LD 2196 would be an important step to getting health care costs under control, and lawmakers should look to pass it.