SB 505: A Look at Health Care Costs

by: Jennifer Daler

Tue Mar 02, 2010 at 10:39:17 AM EST

She opens with the fact that gall bladder surgery at Frisbee Memorial Hospital in Rochester can cost twice that of the same procedure at Alice Peck Day Hospital in Lebanon. Then these fees can change depending upon which health insurance company one uses and what discounts the company has negotiated with the hospital. This puts the large insurers at an advantage over smaller ones.

New Hampshire's health care costs are among the highest in the US. Hassan asks whether there is a way to control costs without sacrificing quality. And how is it sensible to charge the uninsured more for the same procedure than those with insurance?

It was questions like these that led many people to look at what the State of Maryland is doing. After creating a hospital rate review commission almost 40 years ago, the state saw the cost per hospital admissions go from 26 percent above the national average in 1976 to below the national average as of 2007. Meanwhile Maryland hospital profits continue to track national trends while the state's employer based insurance premiums are the lowest percent of household median income of any state in the country.

Maryland and other states with similar commissions study all the factors that go into hospital costs - including things like the proportion of Medicaid patients, uncompensated care, severity of illnesses and cost of living in a given region. Then they approve reasonable prices at each hospital based on those factors.

Senate Bill 505 will begin the discussion about hospital pricing and a commission that finally gives consumers a seat at the table. The legislation, which has bipartisan support, would set up an independent three-member commission and give it the power to look at rates the same way we do with the Public Utility Commission. The cost of the commission would be covered - as it is with the PUC - by a charge to those it oversees, in this case, the hospitals.

Of course the hospitals aren't thrilled. Mike Green, in an op-ed in the Concord Monitor, says
the state's low Medicaid reimbursement is driving the problem. Senator Hassan says the commission will also take this into account. The only way to truly know is to analyze the costs.

In keeping with his party of "no", Senate Minority Leader Peter Bragdon said:

"Control of health care costs will only happen when all parties involved work together for a common solution, not when a large new bureaucracy is set up to control hospital prices and management," said Bragdon.

I would remind Senator Bragdon that so far, the "free market" has failed at controlling costs. Otherwise we wouldn't be in this predicament. Also, who would provide the forum for "all parties involved" to work together, if not the government?

Health care reform is essential if this state and country are to attain a strong, viable economic recovery. And cost control is a very important component of any serious reform effort.

It is great that Democratic leaders such as Senator Hassan are taking the initiative on this.