Maine hospitals, health advocates debate bill that would cap hospital prices

AUGUSTA — Health advocates and hospital officials sparred on Thursday over a bill that aims to reduce health care costs by capping hospital prices.

The bill, LD 2196, would cap hospital prices for private insurance at 200% of Medicare rates, which hospital officials said would harm the health care system financially and result in cuts to services and closures. The bill’s supporters argued the proposal would help limit the cost of health care.

Rep. Drew Gattine, D-Westbrook, the bill’s sponsor, said during a public hearing on Thursday that the cost of health care is rising rapidly, and the “status quo is not sustainable.”

“When it comes to affording health care, Maine families have been hit with a wave of bad news: skyrocketing health insurance costs, an explosion in medical debt, rising premiums,” Gattine said.

Meg Garrett-Reed, executive director of the Office of Affordable Health Care, an agency created by the Legislature, said during the public hearing before the Health and Human Services Committee that hospital prices “have a direct relationship between the insurance premiums and out-of-pocket costs” paid by Maine residents with private insurance.

The Maine Hospital Association estimates the bill, if enacted, would result in $1 billion in revenue losses for hospitals across the state.

“I believe this legislation will collapse Maine’s health care system,” Dr. Guy Hudson, Northern Light Health’s president and CEO, said in testimony before the committee on Thursday.

Dr. Andy Mueller, CEO of MaineHealth, the largest health care system in Maine and parent company of Maine Medical Center in Portland, said in an interview before the hearing that hospitals would close if the bill passes, among other service cutbacks.

“The current health access crisis in Maine will become a catastrophic access crisis if this bill becomes law,” Mueller said.

Hospitals have cited financial issues as the reason for service cutbacks in recent years, including Northern Light Health closing Inland Hospital in Waterville last year, MaineGeneral Health shuttering the Edmund N. Ervin Pediatric Center last year, and the closures of maternity wards across the state.

Sara Gagne-Holmes, Maine’s health and human services commissioner, said in written testimony on Thursday that state officials “will be closely monitoring” the bill.

“We believe this bill will elicit critical conversations that will help advance decisions regarding health care affordability in the state,” Gagne-Holmes said.

If the bill passes, MaineHealth would have to layoff 8,000 of its 24,000 employees, cut services and shutter the neonatal intensive care unit at Maine Med, Mueller said.

That unit serves over 400 infants per year, and closing it would make access difficult, Sarah Thompson, nursing director for the hospital’s NICU, said in an interview before the public hearing. Many, Thompson said, would have to travel to Boston for care.

“Taking care of Mainers in Maine is something we should be proud of, and not outsource,” Thompson said.

Because Medicare and Medicaid pay less than what it costs to provide the services, hospitals make up the losses by charging private insurance more, hospital officials said.

Maine hospitals charge private insurance an average of about 250% of Medicare rates, said Trevor Putnoky, president and CEO of the Healthcare Purchaser Alliance of Maine, which represents companies that purchase private health insurance.

“The cost of health care has become an albatross around the neck of our economy, and an unsustainable burden on the backs of Maine people and employers,” said Putnoky, who testified in favor of the bill Thursday.

Where the cap should be set is unclear without further analysis, he said.

“It’s difficult to say where the Legislature should set a cap on prices. It may be 200%. It may be 300 to 400%,” Putnoky said.

Members of the committee will discuss the proposed bill during a workshop session in the coming weeks.

Committee member Rep. Sam Zager, D-Portland, said during the hearing Thursday that “there’s a tremendous hazard in not doing anything. Our constituents are extremely frustrated and scared and going without care.”