House Democrats released the following after the measure moved out of committee, following strong opposition from the Delaware Healthcare Association, a trade association that represents the state’s hospitals.
DOVER – On Wednesday, the House Administration Committee released legislation aimed at managing the alarming rise of healthcare costs by establishing greater oversight of hospitals.
Sponsored by House Speaker Valerie Longhurst, House Bill 350 (S) 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.
“Simply stated, the skyrocketing costs of healthcare have become unsustainable,” said Speaker Longhurst.
“Through the establishment of the Diamond State Hospital Cost Review Board, we are not only taking decisive action to protect Delaware families 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 usher in crucial transparency and accountability to our hospital budgets and help bring down the crushing healthcare costs impacting so many Delawareans.”
Delaware consistently ranks among the most expensive states for healthcare and the continuously increasing costs could strain the state’s budget, diverting resources from other important investments.
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.
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.
Beginning in 2026, the board would be responsible for reviewing and approving hospitals’ budgets, taking into consideration the State’s healthcare spending benchmarks, the financial health of each hospital, and other economic factors.
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 all facets of expenditure, including administrative costs.
“Right now, Delaware is in the top five of states in terms of healthcare costs and in the bottom half when it comes to healthcare results,” said Senate Majority Leader Bryan Townsend, the Senate prime sponsor of House Bill 350.
“That imbalance is unsustainable, especially given the high cost for Delaware families and businesses. We can and must do better. Because the system will not heal itself, legislative action on behalf of all Delawareans is essential. Just as utilities operating in Delaware are required to justify hikes in rates, our hospital systems also should be held accountable for the fees they charge and the outcomes they produce,” he said.
“I commend Speaker Longhurst for moving this transformational legislation out of committee and look forward to a full House vote on this major step forward in our work to create a healthcare system that is affordable and focused on keeping our neighbors healthy.”
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.
