LD 2196: An Act to Lower Health Insurance Costs, Reduce Barriers to Health Care and Ensure Fair Prices for Health Care
Maine employers and consumers have had to tighten their belts to afford the ever-rising costs of health care; it’s time we align hospital prices with the reality of what Maine families can afford.
The Problem
Spending on hospital care makes up almost 50 percent of total healthcare spending in Maine.
Between 2018 and 2024, inpatient prices in Maine rose 28 percent and outpatient prices increased 51 percent. Maine hospitals on average charge commercial payers 2.5 times more than what Medicare pays them for the exact same service.
Research has consistently found that hospitals are the largest contributor to overall healthcare cost growth – specifically, hospital prices.
In Maine, per-capita hospital expenditures have grown at more than 3.5 times the rate of inflation and more than 6.5 times the rate of household income since 2001.
Claims that hospitals must charge commercial payers more to offset low Medicare and MaineCare payments are not supported by evidence, as studies consistently show hospital prices have little or no connection to hospitals’ share of public-pay patients, and instead are driven primarily by market power. Large systems raise commercial rates to increase revenue rather than cover public shortfalls.
Maine’s healthcare sector is highly consolidated around a few large health systems that have near-monopolistic power in their geographies, which makes it difficult for commercial payers to negotiate fair prices. Studies have found that such concentrated market power leads to higher prices.
In 2024, the average premium for a family plan in Maine totaled over $25,000 — nearly a third of our median household income, and healthcare spending now comprises approximately 10% of household budgets. As a result — according to a recent survey from Consumers for Affordable Healthcare — nearly 40% of Mainers are now skipping or delaying going to the doctor when they are sick due to cost.
What 2196 Does
Commercial Price Caps: Establishes a maximum price that hospitals can charge non-governmental payers at 200% of Medicare for inpatient and outpatient services
Rural critical access hospitals and hospitals that are financially distressed are exempt from the price caps.
Self-insured plans may opt into the price cap if they implement the prior authorization changes and price floors for primary care and behavioral health noted below
Hospital Price Growth Caps: Establishes an overall price growth cap, which limits how much a hospital’s aggregate prices can increase each year. The growth cap is set at Medicare’s inpatient prospective payment system hospital market basket. (~3-4%).
Primary Care and Behavioral Health Price Floors: LD 2196 establishes minimum payments for primary care and behavioral health services at 110% of Medicare.
Prior Authorization Reform:
Prohibits prior authorization renewals more frequently than once every two years for chronic condition treatment, medications, and diagnostic procedures that are necessary for more than a year—except when a new treatment protocol or more cost-effective medication is introduced.
Requires a plan to provide new enrollees 90 days of coverage for services/prescriptions related to chronic conditions that were approved under a previous carrier’s prior authorization process, so long as a prescribed drug is on the new plan’s formulary.