House Passes HB350S2 to control Medical Costs

Yesterday, after the House spent hours in debate, after hours of lobbying by the hospital lobbies, who were also sending stupid texts to Delaware residents like myself…

…the House passed House Bill 350S2 by a close vote of 21-16-4, with Democrats Sean Matthews (who has been voting Republican nonstop lately), Sean Lynn (he’s quirky), and Stell Parker-Selby (she’s Sussex) voting with all Republicans in voting no. The rest of the Democratic caucus voted yes, save Pete Schwartzkopf and Rae Moore, who were absent.

House Bill 350S2 would address Delaware’s escalating hospital spending by creating the Diamond State Hospital Cost Review Board. The board would be tasked with ensuring that any changes to hospital budgets align with the State’s health spending benchmarks and the healthcare needs of Delawareans while protecting healthcare staff, safeguarding community programs, and maintaining hospitals’ strong bond ratings.

Delaware consistently ranks among the most expensive states for healthcare. In 2018, Governor John Carney and the General Assembly established healthcare spending benchmarks to improve healthcare quality for all residents while working to monitor and reduce healthcare spending.

The spending benchmark has fluctuated between 3% and 4%, but healthcare spending has far surpassed that benchmark every year except for 2020, continuing a trend that was seen prior to 2018.

Anticipated for fiscal year 2025 is a 27% increase in state employee premiums. Governor Carney’s proposed budget includes an additional $200 million to cover the state’s share of the premium hike and fund the fiscal year 2024 deficit in state employee healthcare.

Under HB 350, hospitals would be required to submit their proposed budget as well as financial and utilization information to the Diamond State Hospital Cost Review Board on an annual basis.

Starting in 2026, the board would be tasked with reviewing hospitals’ budgets, taking into account the state’s healthcare spending benchmarks, the financial well-being of each hospital, and other economic factors.

If a hospital budget fails to meet the healthcare spending benchmark, the review board would be required to develop a performance improvement plan to help the hospital meet its benchmarks in the next year.

The board would include seven governor-recommended and Senate-confirmed appointees. The president and chief executive officer of the Delaware Healthcare Association would also serve on the board as a non-voting member.

Rather than focusing on cost-cutting measures such as reducing programs and services, the Diamond State Hospital Cost Review Board will adopt a comprehensive approach, looking into the hospital’s long-term plan and all facets of expenditure, including administrative costs.

As a temporary measure until the board begins operations, hospitals would be prohibited from charging more than 250% of Medicare costs to any payer for hospital services in 2025, with exceptions for hospitals that meet certain requirements around Medicare or Medicaid patient populations.

HB 350 now heads to the Senate for consideration.

HB350 – DIAMOND STATE HOSPITAL REVIEW BOARD	Currrent Status – House Passed 21-16-4. Sent to the Senate.
House Sponsors – Longhurst, Minor-Brown, Harris, Baumbach, Heffernan, Williams, Dorsey Walker, Chukwuocha, Griffith, Hensley, Johnson, Lambert, Morrison, Neal, Osienski, Phillips, Romer	Senate Sponsors – Townsend, Sokola, Lockman, Brown, Gay, Hansen, Hoffner, Mantzavinos, Paradee, Pinkney, Poore, Sturgeon, Walsh
House Yes Votes – Baumbach Bolden Bush Carson Chukwuocha Cooke Dorsey-Walker Griffith Harris Heffernan Johnson Lambert Longhurst Minor-Brown Morrison Neal Osienski Phillips Romer Williams Wilson-Anton	Senate Yes Votes –
House No Votes – Parker Selby, Matthews, Lynn, Collins Dukes Gray Hensley Hilovsky Jones-Giltner, Postles Ramone Short Shupe Spiegelman Vanderwende Yearick	Senate No Votes –
House Absents or Not Voting – Moore, Schwartzkopf, Morris, Smith	Senate Absent or Not Voting –

“The skyrocketing costs of healthcare in our state have become unsustainable, outpacing both inflation and wage growth,” said Speaker Valerie Longhurst, the House sponsor of the bill.

“Through the establishment of the Diamond State Hospital Cost Review Board, we are not only taking decisive action to protect Delaware families and small businesses but also addressing this pressing issue with the attention it demands. This proven approach, which has yielded over $100 million in premium savings in states where it has been implemented, will bring needed transparency and accountability to our hospital budgets.

“We have spent the past several weeks engaging in extensive discussions with our hospitals to address their concerns while maintaining the legislation’s goal of creating sustainable growth for hospital costs in our state. While this measure alone won’t resolve all healthcare cost challenges, it does represent an important step to rein in costs and ensure accessible healthcare for all.

“Rising health care costs are having a significant impact on Delaware families and state taxpayers,” said Governor Carney. “House Bill 350 will help lower the growth of health care costs in our state, while making sure we’re protecting health care quality.” 

“Healthcare is more expensive in Delaware than nearly every other state in the nation, while key healthcare outcomes have only gotten worse, an unsustainable system that is negatively impacting both the health of our communities and the health of our economy,” said Senate Majority Leader Bryan Townsend, the Senate prime sponsor of HB 350.

“I commend Speaker Longhurst for taking on this issue and forging a path forward that will keep our neighbors healthy while making the care they depend on more affordable,” he said. “I look forward to continuing this conversation as the Senate considers in the weeks ahead.”