By Samantha Scotti
The subject of health care costs is by no means a new topic of discussion among state policymakers.
According to the Institute of Medicine (IOM), in recent decades health care costs have increased at a greater rate than the rest of the economy. The IOM puts these cost increases into perspective by reporting that, “if the cost of other goods had risen as quickly as health care costs in the post–World War II period, a dozen eggs now would cost $55, a gallon of milk would cost $48, and a dozen oranges would cost $134.”
Health care costs are also a leading concern among Americans. A recent Gallup poll found 55% of Americans worry "a great deal" about the availability and affordability of health care.
NCSL facilitated a lively discussion around health care costs to consumers at the NCSL Legislative Summit in Nashville, Tenn. During the session “Paying the Price: Strategies to Control Health Care Costs,” attendees heard from national experts and state legislators about various factors that drive health care costs and policy options to address them.
Jaime King, associate dean and professor of law at the University of California Hastings College of Law, provided a comprehensive overview of both the population-based and system-based factors that drive U.S. health care spending.
Populations-based factors include things such as an aging population and high rates of chronic disease, while system-based factors include things like overuse and cost of services and industry consolidation. “There is no one silver bullet,” King said, explaining that it is important to look at the various sectors of health care that all contribute to the end cost to consumers.
A panel discussion followed King’s overview, providing examples of legislation and state strategies to control costs. Among the various factors and sectors that contribute to health care costs, the panel focused on three areas: marketplace stability, prescription drug pricing and surprise billing.
The panel, moderated by the Commonwealth Fund’s Akeiisa Coleman, included JoAnn Volk from Georgetown University’s Center on Health Insurance Reforms, Elizabeth Wroe from Leavitt Partners, Representative Martin Carbaugh (R-Ind.) and Representative Yadira Caraveo (D-Colo.).
Surprise Billing/Balance Billing
On the issue of surprise billing (or balance billing), Carbaugh highlighted Indiana HB 1273 (2017) which requires network health care providers that make referrals to out-of-network health care providers to provide notice of the situation. Caraveo similarly highlighted Colorado’s work on HB 1174 (2019), which increases protections for consumers through various requirements and establishes the reimbursement amount for out-of-network providers that provide health care services to covered individuals at an in-network facility. For a 50-state summary of initiatives on balance billing protections, see the Commonwealth Fund’s interactive map.
In some states and counties, the individual marketplace—where people who aren't connected to employer-based coverage purchase health insurance directly off a state-based exchange or the federal exchange—has faced difficulties providing access to affordable health plans. In response, states look to lower costs by exploring methods to stabilize the marketplace.
Caraveo discussed Colorado’s recently approved reinsurance program, which aims to stabilize prices by essentially providing insurance for the insurers. Carbaugh discussed Indiana’s work to create a more flexible regulatory environment for association health plans, which allow small employers to band together to purchase the types of coverage that are available to large employers. National experts provide insight on broader trends in the Commonwealth Fund resource To Understand How Consumers Are Faring in the Individual Health Insurance Markets, Watch the States, which includes an interactive map exploring market stabilization strategies states may be pursuing.
Prescription Drug Pricing
The high cost of pharmaceuticals continues to be a focal point of the health care costs discussion. Caraveo highlighted various initiatives in Colorado aimed to lower prescription drug prices, including two landmark pieces of legislation—the first of which would allow drug importation from Canada. The other piece of legislation caps co-pays on insulin at $100 per 30 days for people with diabetes, regardless of how much they use, starting in January 2020.
With upward of 800 bills introduced during the 2019 session relating to prescription drugs, lawmakers will likely continue to tackle this issue in future sessions. See NCSL’s Prescription Drug Policy Resource Center for additional cost and pricing legislation and resources.
This session was supported by the Commonwealth Fund, a national, private foundation based in New York City that supports independent research on health care issues and makes grants to improve health care practice and policy. The views shared during the session are those of the presenter and not necessarily those of the Commonwealth Fund, its directors, officers or staff.
Samantha Scotti is a senior policy specialist in NCSL's Health Program.