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States Actively Working to Reform Health Care

Health care reform continues to be a hot topic during the 2020 presidential election.

Even though health care reform continues to be a hot topic during the 2020 presidential election, the power to transform health care this year may lie with the states since Congress has not enacted changes.

Health care was a major topic in many governors’ state of the state addresses in 2019 and numerous states passed new legislation aimed at lowering heath care costs and improving quality of care. These changes could foreshadow steps the federal government may eventually take — although not all voters are in favor of federal or state-provided health care.

Here are some examples of current actions or proposed state laws that are making an impact on the health care industry:

Price Transparency

Health care is unique because consumers often don’t know what the cost will be to see a doctor or undergo a procedure until they receive the service. This lack of transparency makes it difficult for consumers to shop for health care. It also lessens competition among providers and removes the incentive to keep prices low.

To improve transparency, 16 states have implemented mandatory All-Payer Claims Databases (APCDs) to collect health care price and quality information. However, only eight states make the information available to the public.

Another consequence of lack of transparency is that patients often don’t know which providers are out-of-network. This can cost significantly more money. Or, patients find out after receiving services that their insurance only covers a portion of the costs — leaving them to pay the balance. More than half of the states have passed or expanded laws to protect patients from these kinds of “surprise” or balance billings.

Provider Payments

Most current payment models reward providers for quantity of care instead of quality. For instance, the more tests that are ordered, the more money the hospital or facility receives. Some states, such as Colorado and Maine, have implemented accountable care organizations for their Medicaid program to encourage providers to improve the coordination of care and minimize unnecessary spending. Maine also requires some health plans to inform patients about lower-cost providers when making referrals.

Some states, such as Maryland, Pennsylvania, and Vermont, use global budgets, which provide a fixed amount over a fixed period of time per population groups rather than fixed rates for individual services or cases. The goal is to control volume by putting a cap on hospital spending.

Market Power

Some states are trying to create a more competitive marketplace and bring down health care costs. One of the ways they are doing this is by repealing laws limiting competition.

For instance, in the 1970s, many states implemented certificate-of-need (CON) laws. CON laws limited the creation of health care facilities, because some legislators thought they would prevent overuse and keep costs down. Instead, it appears that CON laws have thwarted competition and contributed to rising health care prices. Fifteen states now have repealed CON laws.

In addition, some states want to:

  • Reduce provider scope-of-practice limitations, which have contributed to shortages of primary care providers and led to higher costs and longer wait times for appointments.
  • Implement legislation banning anti-competitive contract terms that some large health care systems and health plans have used to gain advantages over smaller competitors.

Cost Controls

States have utilized a variety of measures to try to keep health care prices low, including oversight commissions. In Delaware, Massachusetts and Pennsylvania, oversight commissions analyze health care cost data and make recommendations. In Oregon, the Health Policy Board develops plans to improve health care. The Rhode Island commission has regulatory control over insurers and limits providers to rate increases that don’t exceed the Consumer Price Index-Urban.

Another tactic is using benchmarking to control costs. Benchmarking establishes a standard of excellence and measures how well businesses of a similar type, such as hospitals, perform in comparison. For example, the Massachusetts Health Policy Commission has set a benchmark for limiting growth of state health care costs for all payers to 3.1 percent. Those who are not able to contain costs according to the benchmark must submit improvement plans.

ACA-Like Coverage

Concerned that the Affordable Care Act (ACA) will be invalidated, some states are reinforcing key ACA coverage provisions. Maine and Wisconsin are proposing that insurers provide coverage for individuals who have pre-existing conditions — a provision that already is law under the ACA. Pennsylvania and New Jersey are taking control of their ACA marketplaces from the federal government.

New Mexico and other states offer public insurance options and Washington is considering a Medicare-like plan. Colorado and Washington are implementing public insurance options some believe could be a model for Democrats at the federal level. Both plans would be privately administered, and would pay providers 160 percent or more of Medicare rates.

California is working on an ambitious state-financed coverage expansion.

Un-ACA-Like Coverage

Not all states are working to keep ACA plans. Georgia is looking to eliminate the state’s marketplace and wants to allow healthier consumers to choose pared down plans which do not meet all ACA standards but are more affordable.

Idaho is promoting short-term insurance plans as an alternative to the ACA. These plans are temporary and do not offer the same coverage as ACA. However, the plans are considerably less expensive and targeted to individuals who are between jobs, have missed open enrollment or are waiting to become eligible for Medicare.