Delaware’s House of Representatives has given final approval to a bill aimed at curbing rising health care costs by creating a commission with the power to impose budgets on the state’s largest hospitals.
DOVER, Del. — The state House gave final approval Tuesday to a bill aimed at curbing the growth of health care costs in Delaware by creating a state commission with the power to impose budgetary levies on the state’s largest hospitals.
The bill passed the House on a 24-16 vote, with Republicans and two Democrats voting against it. This caused strong opposition from the medical and business communities.
This time it went to Democratic Gov. John Carney, who issued a statement after the vote saying the bill would help curb the growth of health care costs in Delaware.
“I look forward to signing it into law,” he said.
Democratic lawmakers recently amended the bill to address some of the concerns expressed by opponents, including the many doctors who have demonstrated against the bill at the Legislature over the past few weeks. The changes prompted the Delaware Healthcare Association (DHA), the trade group for Delaware’s hospitals, to drop its opposition to the bill and take a neutral stance.
The bill, modeled after a similar program in Vermont, would create the Diamond State Hospital Cost Review Commission, a panel of medical “experts” appointed by the governor. Hospitals would be required to submit detailed annual budgets to the commission, which would be responsible for ensuring that the hospitals matched rate increases to annual health care cost growth standards set by the state.
The standard price increase rate for 2025 and 2026 will be 2% year-on-year, or the core consumer price index plus 1%. This benchmark would then be tied to a health care cost benchmark established by the state Legislature, which also sets Delaware’s official revenue estimates.
Hospitals that exceed the standards will be required to submit performance improvement plans that include specific measures and schedules to control costs. If the improvement plan fails to control prices, the state board can require the hospital to submit next year’s budget for approval. If the hospital and the board cannot agree on its budget, the board can impose a budget on the hospital.
The commission’s decisions can be challenged in higher courts, but the law requires courts to “take due account of the presumption of formal regularity and the commission’s professional competence.”
Hospitals that fail to submit required information or comply with the rules could be subject to civil penalties of up to $500,000.
Republicans suggested the bill could be challenged in court over whether it received enough votes because it gives state commissions power over hospital boards. They argue that Delaware’s general corporate law reserves the power to manage the affairs of corporations, including hospital corporations, to boards of directors. Changes to the Companies Act require two-thirds approval in each house of parliament, but the hospital bill failed to gain approval.
Opponents of the bill also questioned the wisdom of following Vermont’s lead and allowing states to set hospital budgets.
“Health care costs are not going down in Vermont. It’s not going well,” DHA President and CEO Brian Frazee said at a Senate committee hearing earlier this month.
According to the Centers for Medicaid and Medicare Services, annual cost increases for hospital services in Vermont averaged 6.8% from 1991 to 2020, a period that included 2011, when the Vermont Hospital Cost Review Board was established. It will be. Delaware does not have a state review board. Also, during this period, the average annual cost he increased by 6.8%. Only five of her other states saw average annual costs increase by more.
According to CMS, Vermont’s annual growth rate in hospital services per capita averaged 6.4% from 1991 to 2020, second only to South Dakota’s average annual growth rate of 6.6%. In Delaware, the annual growth rate in hospital services costs per capita averaged 5.4% from 1991 to 2020, tying it with Montana for the eighth-highest growth rate in the nation.
