Two House bills seek to create an affordable system in New Hampshire
HEALTH INSURANCE
What we pay for hospital care remains anyone’s guess. When the bill arrives, charges vary with what employee-sponsored health insurance we might have that year. Affordability of an MRI varies by whether our “benefits” include a $1,000 deductible or if we turned 65 yesterday. The availability of an operating room time for a knee replacement is not related to how disabled you might be, but whether you’re on Medicaid. Despite laws promoting transparency, hospital billing is opaque because of how it is determined. This is the status quo of the health industry.
Historically, managed care insurers dominated the industry and could dictate annual, “capitated” prices for negotiated hospital services. Hospitals responded by expanding and consolidating into multispecialty systems, so to expand their “market share” of those covered by the insurers and command higher prices. Negotiation over hospital pricing is conducted behind closed doors, and administrating all of this varied billing is a huge chunk of U.S. outlier health costs.
Private insurers pay more for services than Medicare or Medicaid. The ACA’s 80/20 rule mandates insurers to spend at least 80 percent of revenue from premi ums on healthcare. Such insurers have little incentive to keep hospital prices down, since their percentage of profit remains the same, and as service costs climb, they simply raise premiums and deductibles to maintain profit.
Between 2000 and 2019, general price inflation in the U.S. averaged 53 percent, but employee premium contributions ballooned 243 percent. New Hampshire has consistently higher premiums for large and small group markets than both the U.S. average and New England states. Witness New Hampshire property taxes attempting to keep up with health benefits for teachers and employees.
It’s not just premiums that make New Hampshire an outlier. In 2020, insurance deductibles for group markets averaged 19 percent higher than average deductibles in the U.S. Commercial insurance compensation for specialty services range 10 percent to 330 percent higher than Medicare rates. Hospitals make the best margins from elective surgical and subspecialty procedures, thus all the ads for knee replacements and heart bypass surgery. Rates for cognitive services, such as treating diabetes and preventing bypass surgery or depression via primary care or psychiatry, are reimbursed barely above the Medicare reimbursement.
Hospital multi-specialty megaliths view primary care as a “loss leader” in their financial decisions, despite primary care being recognized as the only specialty in which more practitioners improve longevity, equity and the health of a population.
Unlike other New England states, New Hampshire has no overall strategy to manage the explosion of our healthcare costs.
An ambitious interstate compact is being introduced in House Bill 353 to create a publicly funded, privately delivered healthcare program.
In lieu of single-payer, a much less ambitious HB 319 brings stakeholders together to study the kind of all-payer system that has been successful in Maryland. All-payer designates a state-authorized agency to transparently coordinate negotiation to set a uniform price for services and procedures between a hospital and all insurers, including Medicare and Medicaid. A yearly global budget is set for inpatient and outpatient services of each hospital, based on historical spending trends, with goals of limiting cost increases, disincentivizing unnecessary over-use of services, and improving health outcomes for communities served. Different hospitals might receive different rates based on hospital characteristics — a tertiary-care teaching hospital will have different costs than a 25-bed hospital in Woodsville or Berlin. The system does not determine salaries and allows for autonomy in the allocation of the global budget, as supported by robust health outcome data.
Maryland introduced the all-payer total cost of care model in 2014, with waivers from the Centers for Medicare and Medicaid Services. In 2019, Medicare spending fell 2.8 percent, driven by a 4.1 percent reduction in hospital expenditures, with lower overall health spending statewide. In 2020, the model reduced hospital spending by $2.5 billion and cumulative care by $1.6 billion, without reduction in quality. Insurance premiums in Maryland are lower than the national average, and the state has the fourth-lowest deductibles for single coverage. (New Hampshire is 49th.)
During the pandemic, when patient volumes dropped due to a halt in elective surgeries and other Covid restrictions, the Total Cost of Care Model helped stabilize revenue.
This decade, hundreds of small hospitals in rural communities have closed across the country. In New Hampshire, nine hospitals have closed their labor and delivery units, doubling the driving time to reach obstetrics care. Pennsylvania recently created an all-payer model of global budgets for its rural hospitals for this reason.
No health system model is perfect, but upward spiraling costs and declining primary care availability is unsustainable. With the first steps in HB 353 and HB 319, a responsible New Hampshire Legislature can achieve a sustainable, affordable, equitable and trusted health system.
Dr. Ken Dolkart, a physician, lives in Grantham.
