Don’t devastate state hospitals
Since the spring of 2020, Connecticut hospitals and health care workers have seen challenge after challenge.
From the COVID-19 pandemic to new hurdles of treating sicker patients than before the pandemic and significant financial hardships, hospitals continue to provide high-quality care to everyone who walks through their doors, regardless of ability to pay, with a dedicated but smaller workforce who are exemplary but exhausted.
As pressures mount, some policy proposals at the state Capitol would further strain the health care system by reducing support to hospitals in communities across the state. The intent of policymakers who proposed these concepts is not to threaten health care access, but that’s exactly what would happen should these policies pass.
The result would be devastating. Hospitals cannot sustain a robust health care delivery system for patients across the state if hospitals cannot cover their costs.
The math doesn’t work.
The year 2022 was the worst year financially for Connecticut hospitals since the pandemic began. Hospital expenses are $3.5 billion higher than pre-pandemic levels with rising costs for labor, drugs, medical supplies, heat, and electricity. Medicare and Medicaid reimbursements have not kept up with the cost of care. The workforce shortage is also pushing hospitals to hire temporary, contract labor, which only adds costs.
Hundreds of millions of dollars in reductions to hospitals would result from a proposal to restrict billing fees to cover operating expenses and reduce access to vital services in hospitals and convenient community settings (House Bill 6669).
Billions more in reductions would result from a proposal (Senate Bill 983) to cap out-of-network rates for inpatient and outpatient services at 100% of Medicare. This proposal is not designed to protect patients from unaffordable out-of-network rates, as both state and new federal law already limit these costs to protect consumers. Rather, the intent is to give insurance companies more power in rate negotiations with hospitals to push in-network commercial rates closer to Medicare payment rates. The problem is Medicare rates don’t cover the cost of care, a problem that has only worsened in recent years.
Government underpays caregivers for services provided to patients on Medicare and Medicaid, paying 80 cents on the dollar for Medicare patients and 68 cents on the dollar for Medicaid patients. In 2022, Connecticut hospitals provided $993 million and $1.12 billion in unpaid care to Medicaid and Medicare beneficiaries respectively. Record low increases in Medicaid spending have left Connecticut spending less than every other state in New England on Medicaid. Underpayments hamstring efforts to meet the health care needs of Medicaid beneficiaries and address health disparities, and result in a massive shifting of costs to employers and individuals with commercial insurance, raising premiums and out-of-pocket expenses.
Even with these underpayments and Connecticut’s high cost of living, we have the 19th lowest hospital prices in the nation. But the system is not sustainable. If all rates are driven to Medicare levels, reimbursements to hospitals would never cover what it costs to provide care.
The combined impact of proposals that either shift power to insurance companies or result in further reductions to hospitals would strain our entire health care system, reduce access to services and programs, hamper efforts to recruit and retain the health care workforce, and hinder investment in innovation and community health programs. A weakened health care system is also less prepared to respond to future emergencies.
Additionally, nothing in these bills would require insurance companies to pass on any savings to consumers.
National health insurance carriers do not need the assistance of government in contract negotiations with hospitals. In 2022, the four national carriers operating in Connecticut collectively made nearly $37 billion in profit, while Connecticut hospitals lost $164 million.
Patients and care providers must remain top of mind. Hospitals serve millions of people through both direct care and community benefit programs, provide over $243 million annually in charity care to those who cannot pay, and are the largest collective employer in the state, supporting more than 229,000 jobs.
Gov. Ned Lamont said that everyone needs to be part of the solution on health care affordability. We strongly agree. We must work together to invest in Medicaid, and implement collaborative approaches like the health care cost growth benchmark to reach our shared goal of providing high quality, affordable, accessible, and equitable care to every person.
True solutions don’t destabilize our hospitals and the workforce that cares for us all.