Congress is expected to soon announce a deal to repeal the Affordable Care Act’s health insurance, medical device and “Cadillac” employer health plan taxes — and to raise the smoking age to 21, according to a senior House Democratic aide familiar with talks.
Why it matters: The decision is a colossal win for the health care industry.
An emergency room staffing firm owned by TeamHealth has filed thousands of lawsuits against patients in Memphis in the last few years, ProPublica and MLK50 report.
This is a collision of two storylines: the aggressive billing practices of private equity-backed health care companies, and providers’ decision to take patients to court to collect their medical debts.
Between the lines: TeamHealth has already been in hot water for its role in surprise billing.
By the numbers: The Memphis subsidiary Southeastern Emergency Physicians has filed more than 4,800 lawsuits against patients in Shelby County General Sessions Court since 2017, per ProPublica and MLK50.
It’s Thanksgiving Eve. Which for Health 202 begs this question: What is everyone thankful for this year when it comes to health policy?
We suspect that maybe – just maybe –you’d get vastly different answers from doctors versus insurers versus drugmakers versus consumers versus any other stakeholder in the $3.6 trillion U.S. health-care industry complex. Everyone has competing interests, which is a prime reason why the country’s besetting problems of ever-rising costs and subpar medical outcomes never quite seem to get solved.
So before you tune out the news cycle for Turkey Day, here’s our best guess at what’s giving each health-care stakeholder an attitude of gratitude.
—The White House and Republicans: Democrats are fixated on Medicare-for-all.
The GOP could hardly be more eager to focus on Medicare-for-all proposals from the Democratic presidential candidates. They view it as a way to veer the political conversation away from their own, unpopular actions on health-care policy and to depict Democrats as out-of-touch with voters.
President Trump and his top health officials have repeatedly decried Medicare-for-all, including during an October speech where the president announced an executive order boosting the role of private plans in the Medicare program.
“Every major Democrat in Washington has backed a massive government health care takeover that would totally obliterate Medicare,” the president said during that address. “These Democratic policy proposals … may go by different names, whether it’s single payer or the so-called public option, but they’re all based on the totally same terrible idea: They want to raid Medicare to fund a thing called socialism.”
—Democrats: The Trump administration is refusing to defend the Affordable Care Act.
Democrats are well aware that the refusal by Trump’s Justice Department to defend the Affordable Care Act from a challenge by GOP-led states is a political gift. They spent the 2018 election castigating the administration for not standing by the health-care law’s protections for patients with preexisting conditions – and it helped them win the House majority.
They plan to hammer that message again in 2020, as they seek the White House.
—The Department of Health and Human Services: Obamacare hasn’t been struck down (yet).
A federal appeals court is expected to rule any time now on the challenge to the ACA, which was upheld by a lower court last year. As The Health 202 has written, the decision against defending the law was a deeply controversial one inside the administration.
HHS Secretary Alex Azar and Seema Verma, administrator of the Centers for Medicare and Medicaid Services, tried to persuade the White House to defend the law. If the courts ultimately strike down the ACA, the administration will be on the hook to propose a replacement that would preserve health coverage for millions of Americans who gained it under the health-care law.
—Health-care advocates: Marketplace premiums are somewhat more affordable.
After several rough years for the ACA’s individual marketplaces, they got some good news this year. Average premiums for mid-level “silver” plans fell four percent for 2020 – a marked shift from the double-digit increases shoppers have typically seen.
That doesn’t mean plans are suddenly affordable for consumers ineligible for government subsidies. But it does mean insurers have found a sustainable way to keep participating in the marketplaces – and the marketplaces are here to stay for people without access to employer-sponsored coverage.
—Drugmakers: Chances for a major, bipartisan drug pricing deal this year are fading.
One of the pharmaceutical industry’s biggest fears is that Congress passes legislation allowing the federal government to directly negotiate lower prices in the Medicare program – a move the industry describes as government “price-fixing.”
Trump used to support allowing direct negotiations, and his staff was even in discussions with House Speaker Nancy Pelosi’s (D-Calif.) office earlier this fall over the potential for a bipartisan effort along these lines.
But the president and his aides have increasingly distanced themselves from Pelosi’s bill to allow direct negotiations. Now it looks like House Democrats will pass that measure as a messaging tactic, only to see it blocked in the GOP-led Senate. A bipartisan Senate bill capping how much drugmakers can annually raise prices has somewhat better prospects, but even that measure has made many Republicans suspicious.
In the end, only minor and less-controversial drug pricing measures may end up being attached to a longer-term spending bill.
—Doctors and hospitals: Any legislation protecting patients from “surprise” medical bills will almost certainly include arbitration – an approach that means higher payments for them.
Virtually every member of Congress agrees American patients should be protected from the surprise bills that can result when they visit an emergency department outside their health plan’s provider network or get care from an out-of-network provider at an in-network hospital.
But how to solve that has turned into an insurers-versus-doctors food fight.
Insurers and the Trump administration want to use a benchmarking approach to resolve out-of-network bills, in which the payments are tied to average prices in the same geographic area. That approach would save the government money, the Congressional Budget Office has said.
But doctors – and some dark-money groups that represent their interests – have been spending millions of dollars to push Congress toward adopting an approach called arbitration. In arbitration, which CBO has said would cost the government more money, the medical provider and the insurer each submit a bid to a third party arbiter, who then make a final decision.
Doctors believe arbitration would translate to beefier payments for them – and outcomes from New York’s arbitration system supports that notion. So if Congress passes surprise billing legislation, it will likely include some element of arbitration given the heavy influence by the doctor lobby.
—Regular Americans: Not much.
We hate to say it, readers, but there’s little for you to be thankful for this year when it comes to health-care policy. Costs for employer-sponsored coverage are going up and coverage plans are getting less generous. Congress appears unable to pass major reforms on the biggest consumer concerns. And the next election is likely to result in a government severely split over how to improve health-care – making it likely the status quo will prevail for some time.
But Happy Thanksgiving, anyway!
https://hbr.org/2019/10/the-role-of-private-equity-in-driving-up-health-care-prices
Private investment in U.S. health care has grown significantly over the past decade thanks to investors who have been keen on getting into a large, rapidly growing, and recession-proof market with historically high returns. Private equity and venture capital firms are investing in everything from health technology startups to addiction treatment facilities to physician practices. In 2018, the number of private equity deals alone reached almost 800, which had a total value of more than $100 billion.
While private capital is bringing innovation to health care through new delivery models, technologies, and operational efficiencies, there is another side to investors entering health care. Their common business model of buying, growing through acquisition or “roll-up,” and selling for above-average returns is cause for concern.
Take the phenomenon of surprise bills: medical invoices that a patient unexpectedly receives because he or she was treated by an out-of-network provider at an in-network facility. These have been getting a lot of attention lately and are driven, at least in part, by investor-backed companies that remain out of network (without contracts with insurers) and can therefore charge high fees for services that are urgently or unexpectedly required by patients. Private equity firms have been buying and growing the specialties that generate a disproportionate share of surprise bills: emergency room physicians, hospitalists, anesthesiologists, and radiologists.
In other sectors of the economy, consumers can find out the price of a good or service and then choose not to buy it if they don’t believe it to be worth the cost. In surprise bill cases, they can’t. Patients are often unaware that they need these particular services in advance and have little choice of physician when they use them.
To blunt growing bi-partisan political support for protecting patients from surprise bills, various groups have lobbied against legislation that would limit the practice. They include Doctor Patient Unity, which has spent more than $28 million on ads and is primarily funded by large private-equity-backed companies that own physician practices and staff emergency rooms around the country. Their work seems to be having an impact: efforts to pass protections have stalled in Congress.
Physician practices have been a popular investment for private equity firms for years. According to an analysis published in Bloomberg Law, 45 physician practice transactions were announced or closed in the first quarter of 2019. At the current pace, the number of deals to buy physician and dental practices will surpass 250 this year, far exceeding 2018 totals. Yes, these investments can provide independent physicians and small practices with an alternative to selling themselves to hospitals and can help them deal with administrative overhead that takes them away from the job they were trained to perform: providing care. But, at least in some cases, the investors’ strategy appears to be to increase revenues by price-gouging patients when they are most vulnerable.
Surprise billing from investor-backed physician practices isn’t the only problem. Private-equity-owned freestanding emerging rooms (ERs) are garnering scrutiny because of their proliferation and high rates. The majority of freestanding ER visits are for non-emergency care, and their treatment can be 22 times more expensive than at a physician’s office.
However lucrative in the short run, private investor-backed companies that hurt consumers are not likely to perform well financially in the long term. Unlike many other markets, health care is both highly regulated and highly sensitive to the reality or appearance of victimizing the sick and vulnerable. Consumer outrage leads quickly to government intervention.
Investors will benefit most by solving the health care system’s legion of problems and by adding true value to our health system — delivering high-quality services at affordable prices and eliminating waste. Those that try to maximize their short-term profits by pushing up prices without adding real healthcare benefits are likely to find that those strategies are unsustainable. Lawmakers and regulators won’t let them get away with such practices for long.
With a contract impasse in its third week, a Gainesville-based health system is spending millions of dollars so that thousands of patients are not having to pay more when visiting the system’s doctors and hospitals.
Northeast Georgia Health System’s contract with Anthem ended Sept. 30, which means that since then, Georgians with Anthem insurance have been out of network for NGHS facilities and physicians.
But in an unusual move, the Northeast Georgia system is making up the financial difference between in-network and out-of-network prices through Dec. 31. That way, Anthem patients won’t pay higher fees when visiting NGHS medical providers, the system said.
“While it will cost millions of dollars per month to protect our patients from out-of-network costs, we’d rather do that than agree to a proposal that would jeopardize the health of our community for years to come,’’ Steve McNeilly, vice president of managed care for NGHS, said.
Most contract disputes between health systems and insurers get resolved before the end of the previous deal, although some agreements come just hours before the end of the expiring pact. The terminated contract between NGHS and Anthem is an exception, and this particular stalemate doesn’t show any sign of progress. Neither side has mentioned any negotiations or even indicated that talks are being scheduled.
The standoff comes at a time when many Georgians are entering their open enrollment period for the 2020 health plan year.
Anthem is by far the state’s biggest health insurer. Northeast Georgia’s hospitals in Gainesville, Braselton, Winder and Dahlonega, as well as its urgent care facilities and many physician group locations, are now out of network for Anthem patients.
“Anthem has only contacted NGHS once since the end of September – and that was only to inform us that they would be processing all claims as out-of-network,’’ McNeilly said. He said Northeast Georgia has proposed a contract with concessions, but that Anthem “refuses to take any meaningful action.’’
“Unfortunately, it appears that Anthem intends for us to be out of network for an extended period of time, so we’re urging patients to switch to a different health insurance plan during open enrollment,’’ McNeilly added.
Northeast Georgia said patients can call its Patient Access Service Center at (770) 219-7678 to get a personalized estimate of hospital charges for upcoming surgeries or procedures. If patients have questions about charges for physician office visits, they can call their physician’s office for more information, NGHS said.
Anthem said Monday that it is “standing firm for our consumers who need greater affordability.’’
The latest proposals from NGHS would increase costs “well above other health systems in the state,’’ Christina Gaines, an Anthem spokeswoman, said. “These increases place a significant burden on consumers because any substantial price increase in the services at these facilities would be directly reflected in increases in medical expenses covered by employer-sponsored group health plans, as well as to member premiums and cost share amounts.’’
What NGHS proposed “was simply not sustainable’’ for Anthem members, she said.
“We provided a revised proposal to them two days before the contract expired and did not receive a response,’’ Gaines said. “We are willing to resume talks so we can come to a new agreement that is fair, provides flexibility and protects affordability.”
Anthem said it can’t guarantee that Northeast Georgia will continue to charge patients the same rates as under the previous contract.
“To protect against unexpected balance billing, and other expenses associated with out-of-network providers, we are urging members to use in-network physicians and facilities,’’ Gaines said. “Anthem continues to have a broad, statewide provider network that delivers access to other quality health care options that remain in-network for our consumers.” Anthem directed consumers to visit www.anthem.com/nghs for information.
Craig Savage, a consultant with CMBC Advisors in North Carolina, said he had not heard previously of a hospital-based system covering the cost gap for patients who are forced out of network by a contract dispute.
“I think it’s a demonstration of good faith to patients,’’ Savage said. “It puts a little marketing pressure on Anthem.’’
But he added that even losing the business of 40,000 patients is “not going to have a huge [financial] impact on Anthem in Georgia.’’
And Savage said the contract standoff may put pressure on local physicians who could lose many patients to another insurer during open enrollment season.
Healthcare costs in the U.S. are too high. Americans struggle to afford basic needs like prescription drugs and too often face crushing surprise bills after undergoing necessary medical procedures. Seniors in particular feel the weight of health expenses when they discover that the Medicare benefits they earned don’t always provide sufficient coverage.
While the Affordable Care Act instituted protections for Americans with pre-existing conditions, guaranteed essential health benefits and made some progress in lowering patients’ costs, those advancements are under attack in the courts and through regulatory actions. I chair the House Ways and Means Committee, which has jurisdiction over a great deal of our nation’s healthcare system, including Medicare. Under Democratic leadership, we are fighting to bring down healthcare costs and preserve critical existing health protections.
Our committee hit the ground running this year. The first hearing I convened as chairman focused on protecting Americans with pre-existing conditions. Nearly 130 million Americans have a pre-existing condition—anything from asthma to cancer to diabetes. Thanks to the ACA, insurance companies can no longer refuse to cover these individuals. The hearing shed light on the importance of this safeguard and the ways it provides Americans with greater peace of mind and financial security.
House Democrats, along with Democratic state attorneys general, jumped into this court battle and continue to defend the millions of Americans with health conditions from discrimination and financial ruin.
We also took concrete steps to increase transparency and lower drug prices. Ways and Means advanced legislation that sheds light across the healthcare supply chain—from pharmaceutical manufacturers to pharmacy benefit managers—to help reduce costs for families. More can be done. In the coming months, the committee will consider legislation to improve the Medicare Part D program, establishing an out-of-pocket cap on expenses for beneficiaries. This would lower costs for seniors and save taxpayers money.
Part D reform is just one way to improve Medicare for beneficiaries. Many seniors aren’t aware that Medicare does not cover routine vision, hearing or dental exams. I will work to change that. Helping seniors access the glasses, hearing aids or dental care they need will save them money on the front end. This coverage will also prevent the trauma and expense of falls or other related health problems that could arise down the road as a result of inadequate services.
Some of the most jarring and devastating medical costs Americans encounter are surprise medical bills. Ways and Means plans to tackle this problem too. We are crafting legislation now that will help patients avoid the huge expenses that follow inadvertently being treated by out-of-network providers.
Healthcare is a necessity and it’s a human right. Paying for it shouldn’t bankrupt families. We can lower patient costs without stifling medical innovation or throwing hospitals into turmoil. It’s possible to achieve commonsense solutions that strengthen our nation’s healthcare system while reducing the burden on consumers.
https://www.axios.com/the-provider-lobby-takes-on-congress-57d2acc6-b26b-4b57-aa64-a75606e612b8.html
Ending surprise medical bills inspires bipartisan kumbaya in a way nearly unheard of these days, and yet a brutal lobbying and public relations blitz by doctor and hospital groups is threatening to kill the entire effort.
Driving the news: Provider-backed groups are spending millions of dollars to sway lawmakers and the public opinion against Congress’s efforts to ban surprise billing, according to a handful of recent reports.
https://www.aha.org/news/perspective/2019-08-16-perspective-gearing-busy-september-capitol-hill
Two weeks ago, I wrote about the important role AHA member hospitals and health system leaders play in advocating for the field. This week, I’ll tell you exactly what we’re advocating for when Congress returns in September … and how you can help.
Here’s where things stand: There will be three issues before Congress next month that could greatly affect our field: surprise medical billing, the planned Medicaid disproportionate share hospital cuts and prescription drug pricing.
The AHA and its members strongly support protecting patients from surprise medical bills. However, we have concerns about the proposals in the House Energy & Commerce Committee and the Senate Health, Education, Labor & Pensions Committee, which both contain a rate-setting approach for settling out-of-network claims.
We believe providers and insurers should continue to be permitted to negotiate payment rates for services provided … and we strongly oppose approaches that would impose arbitrary rates on providers. Hospitals and health systems work hard to align physician networks, but we cannot compromise independent physicians’ abilities to negotiate fair contract terms with payers. These approaches would add unnecessary complexity and burden to the system.
On Medicaid DSH, legislators need to act before Oct. 1 or $4 billion in automatic cuts to hospitals and health systems will go into effect. This will be followed by another $8 billion the following year. If these cuts proceed, they will threaten our ability to care for the most vulnerable members of society. The good news is that there’s strong support in the House for preventing these cuts from kicking in: The House Energy and Commerce Committee passed legislation last month that would eliminate the Medicaid DSH cuts for the next two fiscal years and reduce the cuts by half in the following year. So let’s make sure the Senate acts on this.
In addition, on drug pricing, legislators recognize that skyrocketing drug prices — as well as shortages for many critical medicines — are hurting patients and the hospitals and health systems that care for them each day. The Senate Finance Committee has taken an important step forward by advancing a drug pricing package to the full Senate. More work needs to be done, though … especially in the House.
Here’s where you come in: Your legislators need to hear from you. Urge them to protect patients while rejecting proposals such as rate-setting or setting a “reference” or “benchmark” price. Keep encouraging them to prevent the Medicaid DSH cuts from kicking in so we can make sure the most vulnerable can access care. And tell them how important it is to rein in the skyrocketing costs of prescription drugs.
You can read our latest Action Alert here, which includes key resources for talking with your legislators over the congressional recess.
On Sept. 10, we’re holding an advocacy day on Capitol Hill … so please make plans to join us if you can and add your voice to those of your colleagues.
At the same time, as we all know, the recent tragic events in El Paso, Dayton and Gilroy have increased the focus on addressing gun violence. Be certain: We will continue to give voice to the fact that violence is a serious health problem, as hospitals and health systems are on the front lines of taking care of the victims and serving their communities. Beyond supporting research and education and highlighting the innovative actions taken by our members to address all forms of community violence, we’ll also continue to closely monitor evolving efforts to develop bipartisan, consensus legislation in regard to more specific approaches to address this serious problem.
You are leaders in your communities. You are the experts on health care. And when you speak up, your senators and representatives listen. Together, it’s time to engage with them so we can ensure every hospital and health system has the tools they need to always be there, ready to care.
Opponents of the public option have funded an analysis that warns more rural hospitals may close if Americans leave commercial plans for Medicare.
With the focus on rural hospitals, the Partnership for America’s Health Care Future brings a sensitive issue for politicians into its fight against a Medicare buy-in. The policy has gone mainstream among Democratic presidential candidates and many Democratic lawmakers.
The estimate assumed Medicaid wouldn’t lose anyone to Medicare, and plotted out various scenarios where up to half of the commercial market would shift to Medicare.
The analysis was commissioned by the Partnership for America’s Health Care Future, a coalition of hospitals, insurers and pharmaceutical companies fighting public option and single-payer proposals.
In their most drastic scenario of commercial insurance losses, co-authors Jeff Goldsmith and Jeff Leibach predict more than 55% of rural hospitals could risk closure, up from 21% who risk closure today according to their previous studies.
Leibach said the analysis was tailored to individual hospitals, accounting for hospitals that wouldn’t see cuts since they don’t have many commercially insured patients.
The spotlight on rural hospitals in the debate on who should pay for healthcare is common these days, particularly as politicians or the executive branch eye policies that could cut hospital or physician pay.
On Wednesday, Sen. Elizabeth Warren (D-Mass.) seemingly acknowledged this when she published her own proposal to raise Medicare rates for rural hospitals as part of her goal to implement single payer, or Medicare for All. She is running for the Democratic nomination for president for the 2020 election.
“Medicare already has special designations available to rural hospitals, but they must be updated to match the reality of rural areas,” Warren said in a post announcing a rural strategy as part of her campaign platform. “I will create a new designation that reimburses rural hospitals at a higher rate, relieves distance requirements and offers flexibility of services by assessing the needs of their communities.”
Warren is a co-sponsor of the Medicare for All legislation by Sen. Bernie Sanders (I-Vt.), who is credited with the party’s leftward shift on the healthcare coverage question. But she is trying to differentiate herself from Sanders, and the criticisms about the potentially drastic pay cuts to hospitals have dogged single-payer debates.
Most experts acknowledge the need for a significant policy overhaul that lets rural hospitals adjust their business models. Those providers tend to have aging and sick patients; high rates of uninsured and public pay patients over those covered by commercial insurance; and fewer patients overall than their urban counterparts.
But lawmakers in Washington aren’t likely to act during this Congress. The major recent changes have mostly been driven by the Trump administration, where officials just last week finalized an overhaul of the Medicare wage index to help rural hospitals.
As political rhetoric around the public option or single payer has gone mainstream this presidential primary season, rural hospitals will likely remain a talking point in the ideas to overhaul or reorganize the U.S.’s $3.3 trillion healthcare industry.
This was in evidence in May, when the House Budget Committee convened a hearing on Medicare for All to investigate some of the fiscal impacts. One Congressional Budget Office official said rural hospitals with mostly Medicaid, Medicare and uninsured patients could actually see a boost in a redistribution of doctor and hospital pay.
But the CBO didn’t analyze specific legislation and offered a vague overview of how a single-payer system might look, rather than giving exact numbers.
The plight of rural hospitals has been used in lobbying tactics throughout this year — in Congress’ fight over how to end surprise medical bills as well as opposition to hospital contracting reforms proposed in the Senate.
And it has worked to some extent. Both House and Senate committees have made concessions to their surprise billing proposals to mollify some lawmakers’ worries.
Congress has promised to tackle high consumer health-care costs this year. It’s one of the few issues where lawmakers on both sides of the aisle find common ground.
The Lower Health Care Costs Act, introduced in June, is an almost 200-page piece of legislation that seeks to prevent surprise medical bills, lower prescription drug prices and force hospitals to be more transparent about what they bill insurance companies.
But there are already signs of potential failure.
Despite early momentum, Congressional leaders postponed a vote on the measure until after August recess. The pharmaceutical industry as well as hospital and provider groups have started to lobby against the legislation, meeting with President Trump in July to make their case.
Although the Affordable Care Act led to more people having health insurance, many Americans still struggle with out-of-pocket costs, especially ones they weren’t expecting. Meanwhile, health care is taking up an ever-growing size of state budgets. Governors and lawmakers try to tackle this issue almost every legislative session, but few have succeeded in a meaningful way.
“It’s usually a third of state budgets. States have every reason to try and control health-care costs. And yet, everybody struggles to,” says Josh Shaferstein, vice dean of Johns Hopkins University’s Office of Public Health Practice and Training, and a former health secretary for the state of Maryland.
The first and usually biggest hurdle is private interest groups who see reforms as a threat to their livelihood.
“There are a lot of stakeholders that have vested interest and lobbyists on the ground that will fight tooth and nail, whether it’s doctors and nurses groups or insurance companies. They are perhaps moreso willing to fight at the state level,” says Sabrina Corlette, research professor at Georgetown University’s Center on Health Insurance Reforms.
She points to a bill introduced in Colorado this year that would have capped payments to hospitals in order to lower premiums. After pushback from hospital groups, lawmakers amended the legislation — which was signed into law — so that hospitals will be paid the same but will have to pay back a portion of their revenue to help lower premiums.
In Washington state, which passed a first-in-the-nation “public option” bill this year, lawmakers rewrote the original legislation after doctor and hospital groups fought a provision that would have set the same cap on provider payments as Medicare. The final legislation reflected a compromise for insurers to pay providers 160 percent of Medicare rates.
At least eight other states discussed or introduced public option bills this year, but they failed to gain traction.
In Delaware — a state that ranks third in health-care spending but 31st in health outcomes — Gov. Jay Carney signed an executive order in November that outlines eight goals the state will work toward to curb the growth in health spending. But Kara Odom Walker, the state’s health secretary, concedes that they weren’t able to convince stakeholders to enact new penalties or regulations.
“Being a small state makes it a lot harder to do things that might be unpopular. Any conversation that includes words like ‘penalty’ or ‘payment cap’ is like a bomb going off,” she says.
The health-care industry is one of the biggest in the country. That gives it a lot of leverage.
“The health systems are often the largest employers in town. The governor says they want to slow health-care spending growth, and the hospital group will say, ‘that means losing jobs,’” says Robert Mechanic, executive director of the Health Industry Forum.
But as Congress tries to lower out-of-pocket costs, they have an asset that states don’t: better data. Corlette says states often lack impartial numbers on potential policies, hurting their ability to assess and defend legislation.
“It’s very hard for your average state legislator to pierce the veil,” Corlette says. “There’s an imbalance of info for legislators to really tackle the problem. They don’t have a Congressional Budget Office.”
Many compare efforts to control health-care costs to a game of whack-a-mole. A state might successfully regulate spending in one area only to see costs skyrocket in another.
“You might be able to cut rates in Medicaid, but then rates will pop up in private insurance. The standard toolkit for states is fraught with political danger,” says Shaferstein.
“Health care is so complex, and there are so many different players. It’s really hard to get your arm around the whole bundle,” says Mechanic.
For instance, Medicare lowered the limit for how long older patients can stay in hospitals. But there’s some evidence that the Medicare savings became extra costs for nursing homes because hospitals started providing fewer services for elderly patients altogether.
When it comes to controlling drug prices, states haven’t made much progress. They have made more headway regulating surprise medical bills.
Half the states have passed surprise billing laws. Only nine of them, though, included “comprehensive protections” that apply to all insurance plans, according to the Commonwealth Fund.
While states have struggled to actually lower drug prices, like Congress plans to do, they have passed laws to make them more transparent and to clamp down on pharmacy benefit managers — middlemen who negotiate drug benefits for plans.
Five states have enacted laws that require drug companies to notify them if they will significantly raise the price of a drug, and at least a dozen have restricted the power that a pharmacy benefit manager can have, like requiring them to register with the state.
There are some success stories and lessons learned that Congress could use to lower health-care spending in general.
“States should be thinking of more global solutions because you kind of have to go big. Oftentimes people are looking to save $1 to $2 million a year, but that’s not going to make much of a difference,” says Shafterstein.
Only a couple of states have “gone big” in this sense.
Massachusetts passed what became the framework for the federal Affordable Care Act in 2006, known as “RomneyCare,” which requires residents to have health insurance. Health-care spending has since slowed in recent years. Mechanic credits that to the law’s requirements for private health entities to publicly justify price hikes and high spending.
In Maryland, it has taken decades to get health-care spending under control. The state has had an all-payer system for hospitals since the 1970s, meaning they get a fixed sum every month rather than bill insurers for every claim. While that system — which is only used by one other state, Vermont — curbed hospital spending per patient, hospital spending overall grew at a slightly higher rate than the national average.
So in 2014, Maryland forced hospitals to limit their spending to 0.5 percent less than the national growth rate. It has largely been deemed a success, with a report commissioned by the federal Centers for Medicare and Medicaid Services finding that “Maryland hospitals were able to operate within their global budgets without adverse effects on their financial status.”
On a less global scale, states have been able to drive down premiums by implementing reinsurance programs, meaning the government pays for the most expensive patients, taking that bill off insurance companies’ plate.
But reinsurance is like slapping a band-aid on a much larger wound.
“Recent state efforts on reinsurance have worked, but they aren’t really getting at the overall cost of coverage,” says Kevin Lucia, research professor at Georgetown University’s Health Policy Institute.
HENRY KOTULA 