State Policy Opportunities to Control Health Care Prices: A CPR Report

New study findings offer insight into proposed policy framework aimed at controlling the rising costs of health care in the US.¹ Catalyst for Payment Reform (CPR) released a report that explored stakeholder perspectives in Florida, Michigan, and Nevada, revealing both the challenges and opportunities states face in reforming health care pricing structures. Through interviews with key health care stakeholders, CPR sought to understand the varying approaches and attitudes toward policy interventions targeting commercial health prices, highlighting the importance of state-specific solutions.

With support from a range of stakeholders, state policymakers can work to curb rising health care prices, alleviating the burden on patients and purchasers alike.
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“Policy changes are necessary to constrain health care prices, and states can play a pivotal role in bringing relief to the commercial market,” Andréa Caballero, vice president of Policy at CPR, said in a statement.² “State leaders understand their unique constituencies and can customize appropriate public policy responses. By hearing from diverse health care stakeholders, this research supports feasible approaches for state policymakers to tackle health care prices.”

Last Year's Unprecedented National Health Spending

National health spending reached a historic $4.8 trillion with an annual growth rate reported at 7.5% in 2023, according to projections from the Office of the Actuary (OACT) of CMS, published in June by Health Affairs.³ As spending appears to be outpacing economic growth, projections suggest that with an expected annual growth rate of 5.6%, expenditures will soar to $7.7 trillion by 2032.

CPR’s report, State of Healthcare: Policy Considerations to Constrain Commercial Prices, offers a foundation for broader discussions with business leaders, policymakers, and other stakeholders.¹

Key Research Findings:

1. Broad Support for Price Reforms: More than two-thirds of respondents expressed interest in using state policies to lower health care prices, recognizing the burden that rising costs place on both purchasers and patients. However, there was significant disagreement on the most effective methods to implement.
2. Support for Specific Policy Measures: While hospitals were seen as primary opponents of price-limiting reforms, most other stakeholders supported measures like banning facility fees for outpatient services and prohibiting anti-tiering and anti-steering clauses in provider contracts. There was also strong backing for policies requiring health care providers to notify state authorities before mergers or acquisitions.
3. Hospitals as Key Opponents: Most stakeholders outside the hospital sector believe hospitals leverage the complexity of the health care system to overcharge patients and fight price-reducing policies. Hospitals, rather than politicians or insurers, were seen as the biggest obstacle to meaningful reform.
4. Purchasers Favor Competition: Employers and other health care purchasers expressed enthusiasm for price-reducing reforms that would preserve their ability to choose among providers and health plans. Banning anti-competitive clauses in contracts was seen as an essential step to promote competition and reduce costs.

State-Specific Insights:

• Nevada: Long distances and the need for patients to cross state lines for care were highlighted as critical issues. Any price-control policies in Nevada would need to preserve and improve access to care while addressing cost growth.
• Michigan: With a strong health plan sector, any meaningful policy reform would need to engage health plans as central players in controlling prices. Employers and purchasers in Michigan recognize the need to work closely with health plans to align on policy objectives.
• Florida: Rural health access and the political power of hospitals present unique challenges in the state. Stakeholders acknowledge hospitals as significant contributors to high prices and support efforts to limit anti-competitive practices, such as steering patients to higher-cost providers.

"Almost unanimously, across all 3 states and stakeholders, participants indicated rising health care costs pose a burden to their organizations, their patients, and/or to the residents of their states," the report stated.

CPR noted the report, made possible by Arnold Ventures, will be part of a larger public awareness campaign to encourage the adoption of state-level reforms aimed at controlling health care prices.

The findings underscore the potential for states to make significant strides in price control, provided they craft policies that target their specific needs and challenges. According to the report, with support from a range of stakeholders, state policymakers can work to curb rising health care prices, alleviating the burden on patients and purchasers alike.

References

1. State of healthcare: policy considerations to constrain commercial prices. Catalyst for Payment Reform. Fall 2024. Accessed September 25, 2024.

2. Catalyst for Payment Reform research study sheds light on opportunities for states to control health prices through policy. News release. CPR. September 24, 2024.

3. Grossi G. US health spending hits $4.8 trillion, insurance coverage peaks in 2023 projections. AJMC. June 12, 2024. Accessed September 25, 2024. https://www.ajmc.com/view/us-health-spending-hits-4-8-trillion-insurance-coverage-peaks-in-2023-projections