“There is simply no ability for hospitals to absorb a $1.2 billion cut in 2028,” said one industry leader. A union advocate said the bill “takes a modest but important step” to address rising health care costs.
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A bill that would limit the amount of money a hospital can charge generated warnings from health care organizations that it could trigger hospital closures.
But consumer advocates said that LD 2196, “An Act to Lower Health Insurance Costs, Reduce Barriers to Health Care and Ensure Fair Prices for Health Care,” could help people struggling to afford health care.
The legislature’s Committee on Health and Human Services held a public hearing on the bill last week. A work session is scheduled March 12.
LD 2196 “would reduce the amount of health care spending in this state and slow down growth going forward," the bill’s sponsor, state Rep. Drew Gattine, District 126, said in his testimony.
‘Wave of bad news’
“When it comes to affording health care, Maine families and businesses have been hit with a wave of bad news: skyrocketing health insurance costs, an explosion in medical debt, rising premiums, and letters from insurance companies warning that coverage will cost even more next year,” Gattine said.
LD 2196 focuses on the growth in hospital costs.
“Hospital spending makes up the largest share of health care costs in our state, and hospital prices have been growing far faster than inflation and household incomes,” Gattine said.
Gattine said the bill would put a ceiling on hospital prices, beginning Jan. 1, 2028.
“Large hospitals will no longer be able to charge more than double what Medicare sets as a fair price, and the growth of hospital prices will be limited each year,” he said.
Small rural hospitals would not be subject to the ceiling nor would hospitals determined to be financially distressed.
The bill would also put limits on prior authorizations “and make it easier for patients to see their doctors and for doctors to deliver care.”
30% reimbursement cut
Jeffrey Austin with the Maine Hospital Association, speaking in opposition, said the bill would cut $1.2 billion from hospitals in 2028 — a nearly 30% cut to current commercial reimbursement rates.
“There is simply no ability for hospitals to absorb a $1.2 billion cut in 2028,” Austin said.
Hospitals barely broke even in 2024, he said.
“A cut of $1.2 billion will have significant and lasting damage to our health care system in Maine and the worst impact will be on accessibility, particularly for Medicaid recipients,” Austin continued.
Like consumers, the health care industry itself faces affordability issues, he said.
“Hospitals feel the rising cost of labor and utilities, pharmaceuticals and regulation and taxes and health care for their own employees,” Austin said. “This bill does nothing to reduce or even limit the growth of all the input costs hospitals themselves face.”
‘Less care, less access’
MaineHealth, Maine’s largest health care organization, said the organization agrees that health care affordability “is a serious and growing concern.”
But the organization said LD 2196’s rate cuts and cost growth caps would destabilize hospitals, eliminate thousands of jobs and put critical services at risk.
“This bill assumes hospitals are operating with excessive margins that can simply be cut without consequences,” said Dr. Andrew Mueller, MaineHealth’s CEO. “That is not the reality. The scale of reductions contemplated in LD 2196 would force us to dismantle essential services that Maine people depend on every day.”
LD 2196 would result in more than $627 million in cuts to MaineHealth and the elimination of more than 8,000 jobs, about a third of its workforce, including clinical and administrative positions; and would make it impossible to sustain Maine’s only Level 1 Trauma Center and the state’s highest level neonatal intensive care unit at MaineHealth Maine Medical Center in Portland, he said.
Dr. Guy Hudson, president and CEO of Northern Light Health, said that, while some states have attempted to absorb cuts similar to the legislation, “Maine's health care system does not have the scale, margin or capability to withstand this blow.”
If enacted, the bill would cost Northern Light Health $220 million annually, severely impacting patient care, Hudson said.
“As a result, Mainers will not get better or cheaper health care — they will get less care and less access,” said Hudson. “This legislation will result in layoffs, consolidation, closures and force people to travel further south for health care.”
‘Modest but important step’
But Rachel Collamore, consumer assistance program manager with Consumers for Affordable Health Care in Augusta, said the nonprofit supports the proposed legislation.
The organization operates a help line that fielded nearly 7,000 calls last year, with many callers concerned about not being able to afford insurance coverage and/or health care.
Collamore cited a 19-year-old who needed outpatient hospital services that, even with insurance, resulted in an unexpected bill totaling $6,500. He and his mother had reached out to his carrier and to the hospital for estimated costs for the services and neither were able to provide the information.
“They are both greatly frustrated by the fact that he now has this bill hanging over his head for the care he needed that is far more expensive than they can afford,” she said.
Beth White, director of politics and legislation for the Maine Service Employees Association, Local 1989 of the Service Employees International Union — a labor union representing over 13,000 Maine workers — said the organization supports the bill as “an effort to address the rising costs of health care and health insurance in Maine.”
The state employee health plan’s ability to increase premiums to cover cost is limited by Maine statute, resulting in plan changes with higher deductibles, co-pays and out-of-pocket maximums, White said.
“This is all to say that something needs to be done to address rising health care costs in Maine,” White said. “We believe this bill takes a modest but important step in doing so and hope you will support it.”
Adam Bloom-Paicopolos, executive director of the Alliance for Addiction and Mental Health Services, said the proposal’s beneficial aspects include expanding access for certain behavioral health services.
But he said the organization was concerned about the proposed reimbursement cap for hospital services. Many of Maine’s hospitals, he said, “operate robust community behavioral health programs that are critical pieces of our continuum of care. We fear that with the financial losses associated with this cap, these services that are so critical to the families and communities we serve will be the first to go.”
