OP-ED | The Governor’s Plan To Lower Healthcare Costs – What’s In It, And What’s Missing

It’s an election year and voters want relief with healthcare costs and insurance premiums. Gov. Ned Lamont has proposed a slate of bills to address the problem. He has a good proposal to limit drug price increases, an unnecessary proposal to draft yet another report on what’s driving up costs, and a bad one to divert $3.9 billion into primary care at the expense of other critical care, and to implement a risky payment model that has failed elsewhere. Worse, he’s missing the biggest problem – escalating hospital prices driven by big health systems that are getting bigger.

First, the very good part. Gov. Lamont is re-submitting his bill from last year to claw back extreme price increases for drugs. Prescription medications are the fastest growing driver of rising healthcare costs and insurance premiums. A 2018 survey found that 20% of Connecticut households skipped doses or cut pills in half based on cost. The bill would allow drug companies to make generous profits, up to 2% more than the rest of the economy, but they can’t gouge us. This was in President Joe Biden’s Build Back Better bill, but that appears to be dead now. The governor is also proposing to import drugs from Canada.

Gov. Lamont also submitted a bill to study the drivers of rising healthcare costs, codifying a process that started in 2020 under an Executive Order. The plan is to cap rising costs, but thankfully the plan to lower costs through secret negotiations between the Office of Health Strategy and big health systems has been dropped. The deal could lower costs by cutting less profitable hospital services such as emergency room and psych beds, harming communities. The Cost Cap process is being directed by a steering committee dominated by insurers and big health systems – the main culprits in rising healthcare costs. When problems are identified, the remedy should be developed with public input, through the legislative process, with lots of public oversight at every step.

Unfortunately, the governor also is proposing to support primary care, a good thing, but in the wrong way. The proposal starts by increasing the share of all state healthcare spending that goes to primary care. This will cost Connecticut’s healthcare system an extra $3.9 billion per year by 2025. That money will have to come out of other critical care and will hit seniors, people with disabilities, and underserved communities hardest. Healthcare is full of ways to spend more without improving care. Primary care doctors are pushing the Office of Health Strategy to raise their incomes, which would raise spending but do nothing to improve access. 

The state is also limiting who counts as a primary care provider to exclude gynecologists, reducing primary care options for women. Many women get regular checkups and preventive care from their gynecologists, who are trained and licensed to provide those services. The state should respect women’s choices about who they trust for care.

How should the state spend $3.9 billion on healthcare? There was no public process or input to choose primary care. According to Medicare for All CT, the Office of Health Strategy received at least 90 public comments opposing their primary care plan. But, in a departure from the usual process, they won’t release them until the report is finished, when it’s too late. I bet if the state asked Connecticut residents how best to spend $3.9 billion on healthcare, they’d hear about mental health, access to specialists, loan repayment assistance, substance abuse prevention and treatment, among others. They’d hear about the need to invest resources upstream in housing, healthy food, health education, and wellness supports to prevent healthcare problems. But they didn’t ask.

The biggest problem with the governor’s healthcare proposals is what’s missing. The main driver of rising healthcare costs and insurance premiums is hospital prices, both inpatient and outpatient. As more hospitals merge, with other hospitals and with physician practices, the resulting health systems become monopolies in their area. Hospitals are increasing their prices because they can.  Nothing in the governor’s bills addresses this elephant in the room.

There is a lot the state can do to remedy this. First, we can strengthen the state’s process for scrutinizing mergers. There should be a public good to any merger, not just a chance for massive health systems to get bigger. If mergers are approved, the state must impose and enforce conditions that control costs and preserve services.

But it’s too late for many areas of Connecticut. We can make the current consolidated market more competitive by prohibiting anti-competitive contracts between insurers and the big systems. 

We also should provide subsidies to independent hospitals that are struggling. Recognizing the benefits of community connection and local control, the state provides specific loans for small businesses. Our local hospitals are critically important to communities and to keeping healthcare affordable. If Connecticut’s few independent hospitals are swallowed by big systems, we will be forever at their mercy. 

The governor’s legislative package is a good start. But the administration needs to back up and reach out to the public to set priorities and to get input on how to make these work in the real world. And it may be politically hard to do so, but the administration also needs to address escalating hospital costs.