States have new roadmap for health care reform

A new federal report gives states a roadmap for improving access to health care and making it more affordable, and lawmakers across the nation should act on it soon. The report, a collaboration of several agencies, is a much-anticipated response to President Donald Trump’s 2017 executive order to promote choice and competition in the health care marketplace. That order and the report are based on a recognition that state and federal regulations have created significant barriers to innovation in health care, declines in the quality of care, and cost increases that taxpayers cannot sustain.

Congress should act, but even if it does not, state lawmakers can work to find quality, affordable health care for their constituents.

{mosads}A study from the National Bureau of Economic Research, cited by the administration, found that prices at hospitals without local competitors are 12.5 percent higher than those at hospitals with four or more competitors. This disparity amounts to an average price increase of $1,800 per patient admission. Unfortunately, an additional analysis found that 77 percent of Americans live in urban markets with high levels of hospital consolidation. Mergers between large hospitals continue apace, jumping by 40 percent alone in 2010, further reducing competition and contributing to increased costs for patients. The report cites a 2011 study that found price increases can rise as high as 40 percent when a hospital acquires a competing one.

Similarly, the lack of competition among insurers also leads to higher prices for consumers. Research published by the American Journal of Health Economics in 2015 found that by simply adding one additional insurer offering health insurance plans reduced the price of premiums. Unfortunately, as the new report outlines, Americans without employer-based or publicly supported coverage have limited options when shopping for insurance. In 2017, patients in one-third of counties across the country had only one insurer participating in the Patient Protection and Affordable Care Act (ACA) exchanges. That number has risen to over one-half in 2018.

Costs for care and coverage aren’t the only concerns addressed by this latest report. A lack of competition also has a negative impact on patient outcomes. The administration notes that a 2000 study of more than 500,000 Medicare beneficiaries found heart attack patients treated at hospitals with fewer competitors had a statistically significant increase of mortality within one year of treatment. The new federal report then concludes that we can expect to incur nearly 6,000 premature deaths per year nationwide, just from heart attacks, simply because of a lack of competition.

Even as states wait for the federal government to implement some important reforms, they can take steps to curb these dangerous trends. Indeed, states can start to work immediately on five recommendations suggested in the report:

• Loosen scope of practice requirements on providers. States should eliminate the requirement that physicians and dentists — and dentists and their assistants — enter into burdensome collaborative and practice agreements. State-required agreements impede the assistants’ ability to provide qualified care to patients and are not needed to protect public health and safety. States also should explore emerging health care occupations, such as dental therapy to see how they can contribute to access, quality and affordability of care.

• Change regulations covering telehealth to improve patient access. States should adopt interstate compacts that will let doctors see patients across state lines without having to obtain licenses in multiple states, and states should modify reimbursement policies that financially discriminate against telehealth providers.

• Repeal or scale cack certificate-of-need (CON) laws. The administration’s report finds these laws are ineffective, with no compelling evidence to suggest they improve quality, access, efficiency, or allow for increased charity care. The report recommends a full repeal or significant reduction in state CON laws. It says such reforms prevent competing providers from contesting a CON application made by another party.

• Loosen insurance rules and mandates. States should allow maximum consumer choice and competition in their health care markets by, among other things, welcoming Association Health Plans (AHPs) and short-term, limited-duration insurance plans. The administration issued guidance for these plans in the fall, opening the door for state lawmakers to reform regulations to make them more accessible to patients.

• Encourage price transparency. States should look for ways to encourage patients to shop for competitive prices for health care services. They should also make readily understandable reference-pricing models available to consumers.

Many states will begin 2019 with fresh legislative bodies and administrations. Lawmakers should file legislation addressing these critical issues in early January, if not this month, and assert their roles in returning affordable, quality health care choices to patients across the country.  

Lindsay Killen is vice president for strategic outreach and communications at the Mackinac Center for Public Policy in Midland, Michigan, and a member of the board of policy advisers at the Heartland Institute in Arlington Heights, Illinois. Follow her on Twitter @LinsBoydtweets.