House Democrats have released a statement following the measure’s passage out of committee, despite facing strong opposition from the Delaware Healthcare Association. The association, which represents the state’s hospitals, voiced its concerns regarding the proposed legislation.
The House Administration Committee has recently introduced a new bill to address the issue of skyrocketing healthcare costs. The main objective of this legislation is to implement a more rigorous oversight system for hospitals, with the aim of controlling and managing these expenses effectively.
Sponsored by House Speaker Valerie Longhurst, House Bill 350 (S) aims to tackle the rising hospital expenses in Delaware through the establishment of the Diamond State Hospital Cost Review Board. This board would have the responsibility of ensuring that any modifications to hospital budgets are in line with the State’s health spending benchmarks and the healthcare requirements of Delawareans.
Speaker Longhurst expressed his concern about the escalating costs of healthcare, emphasizing that they have reached a point where they are no longer feasible to sustain.
By setting up the Diamond State Hospital Cost Review Board, we are not only taking strong measures to safeguard Delaware families but also tackling this urgent issue with the necessary diligence. This effective strategy, which has resulted in over $100 million in premium savings in other states, will introduce vital transparency and accountability to our hospital budgets, ultimately alleviating the burden of skyrocketing healthcare costs that affect numerous Delawareans.
Delaware’s healthcare costs have consistently placed it among the most expensive states. This ongoing trend of rising expenses could potentially strain the state’s budget, diverting funds away from other crucial investments.
In 2018, Governor John Carney and the General Assembly implemented healthcare spending benchmarks with the aim of enhancing healthcare quality for all residents and simultaneously monitoring and decreasing healthcare spending.
Healthcare spending has consistently exceeded the spending benchmark of 3% to 4% every year, with the exception of 2020.
In the proposed budget for fiscal year 2025, there is an expected 27% increase in state employee premiums. To address this, Governor Carney has included an additional $200 million in the budget to cover the state’s share of the premium hike and to fund the fiscal year 2024 deficit in state employee healthcare.
Hospitals would need to submit their annual proposed budget, along with financial and utilization information, to the Diamond State Hospital Cost Review Board as mandated by HB 350.
Starting in 2026, the board will have the responsibility of reviewing and approving hospitals’ budgets. During this process, they will carefully consider the State’s healthcare spending benchmarks, as well as the financial well-being of each hospital and other relevant economic factors.
The Diamond State Hospital Cost Review Board is taking a comprehensive approach to expenditure management instead of solely focusing on cost-cutting measures like reducing programs and services. This approach involves examining all aspects of expenditure, including administrative costs.
According to Senate Majority Leader Bryan Townsend, Delaware is currently ranked in the top five states in terms of healthcare costs, but falls in the bottom half when it comes to healthcare results.
State Representative John Kowalko emphasized the urgency of addressing the unsustainable imbalance in healthcare costs for Delaware families and businesses. He stressed the need for legislative action to hold hospital systems accountable for the fees they charge and the outcomes they deliver. Drawing a parallel with utilities being required to justify rate hikes, Kowalko highlighted the importance of ensuring transparency and fairness in the healthcare system.
“I applaud Speaker Longhurst for advancing this groundbreaking legislation from committee, and I eagerly anticipate the upcoming vote in the House. This represents a significant stride in our ongoing efforts to establish an affordable healthcare system that prioritizes the well-being of our community.”
Until the board becomes operational, hospitals will not be allowed to charge more than 250% of Medicare costs to any payer for hospital services in 2025. This temporary measure aims to ensure fair pricing and affordability for patients.
