By Karen Davenport, Julia Burleson, Abigail Knapp, and Kennah Watts
Hospitals provide critical, complex services to their communities, such as trauma care, intensive care, and life-saving surgeries, and are also an important source of primary and preventive care through their outpatient departments. But this important care doesn’t come cheap. The United States spent $1.5 trillion on hospital care in 2023, which represents 31 percent of total health care spending, with private payers shouldering more than one-third of this spending. Private payers also pay more than twice as much, on average, as public programs for hospital care, and experience significantly higher rates of growth in spending for these services. These dynamics raise important affordability concerns for health care consumers, with implications for health insurance premiums, cost-sharing responsibilities, and access to care.
As state and federal policymakers examine critical issues in the American health care system, particularly the inter-related issues of coverage, cost, and access to care, they need a deep understanding of how the public sector currently regulates and, in some cases, exercises oversight authority over this important component of the nation’s health care delivery system. Many of these regulatory and oversight activities occur at the state level. To foster this understanding, and to inform future policymaking, CHIR examined states’ oversight of hospitals’ role in health care markets and have arrayed the findings over a series of eleven unique maps depicting approaches in all 50 states and the District of Columbia. This analysis ranges from states’ broad interest in understanding health care spending and affordability, to more targeted interventions, specifically:
- Cost growth benchmarks
- State affordability offices
- Hospital transaction oversight
- Certificate of public advantage
- Certificates of need
- Anti-competitive contracting restrictions
- Hospital billing oversight
- Hospital financial reporting requirements
- Hospital ownership transparency
- Hospital price regulation
- Hospital consumer financial protections
For the definitions of the terms above, visit our glossary here.
CHIR’s Early Findings and Observations
The CHIR team will be diving deeper into many of the topics these maps illustrate over the coming months, such as price regulation, cost-growth benchmarks, ownership transparency, and financial reporting requirements. Some of our initial observations include:
- States take unique and sometimes idiosyncratic approaches to managing hospitals’ role in the health care system. Some states take a consistently hands-off position to hospital regulation. Utah, for example, exercises state authority in only one of the eleven domains we examined1. Other states are much more involved in regulating hospitals’ market behavior. Oregon, for example, exerts statutory or regulatory authority in ten of our eleven map domains and is arguably a policy leader in transaction oversight and price regulation2. Finally, states such as Texas, which is one of four states in the nation that prohibit anti-tiering and anti-steering provisions in payer/provider contracts, takes an otherwise relatively laissez-faire approach to hospital regulation as demonstrated by the lack of transaction oversight authority.
- Policy areas ripe for greater adoption include: price regulation, particularly the use of reference pricing, with states expanding their use of this strategy from state employee health programs (SEHPs) to the commercial market; billing oversight, including use of enhanced rate review and prohibitions on facility fee charges; and the extension of merger review authority to post-transaction oversight.
- Some states are investing significant capacity in data collection and analysis to understand hospitals’ role within their state’s complex health care financing and delivery system. Organizations such as Massachusetts’s Center for Health Information Analysis, the Maine Health Data Organization, California’s Department of Health Care Access and Information, and similar agencies in other states have developed sophisticated data collection, analysis, and dissemination capabilities that improve policymakers’ understanding of the health care landscape.
- More than half of the states have not established certain financial protections for hospital patients, such as requiring hospitals to offer payment plans or limiting interest rates on medical debt. New federal policies, combined with Congress’s failure to extend enhanced premium tax credits (PTCs) for Marketplace coverage are expected to reduce health insurance coverage by more than 14 million people, significantly increasing the likelihood that many consumers will fall into medical debt. The absence of state-level financial protections could therefore be of urgent interest to state residents.
For more information, please visit CHIR’s interactive maps here.