Why Should Delaware Care?
The cost of healthcare has steadily risen in Delaware over the past few years, placing greater burdens on patients feeling the financial pinch on multiple fronts. New legislation signed Monday aims to lower those costs and reduce the cost of state employee healthcare — one of the state government’s single-largest costs.
Gov. Matt Meyer signed three bills Monday that will reshape the healthcare landscape in Delaware and how patients pay for their treatments in coming years.
The bills introduced and passed this year would dramatically increase the pool of patients eligible to receive free and discounted care, put price caps on hospitals, and temporarily block the acquisition of Delaware health systems by private equity firms.
Meyer signed the bills at the Henrietta Johnson Medical Center in Wilmington’s Southbridge community, flanked by staff at the center, as well as legislators and leadership in the state health department. During a press conference, he pointed to the stress of paying for healthcare, and how one medical bill or diagnosis could derail someone’s finances.
The governor added the current healthcare payment system is not designed to benefit patients, and that if people were to redesign it today, it would “look nothing like what we actually have.”
“Not a human being on planet Earth would design our system, the payment models, the care models, the way it’s designed today,” Meyer said.
One of the first laws discussed puts a two-year moratorium on the acquisition of health systems by private equity firms, something Meyer said would keep “profiteers” away from the state’s health systems.
Senate Bill 313, introduced by Sen. Spiros Mantzavinos (D-Elsmere) earlier this spring blocked private equity firms from acquiring hospitals in Delaware until 2028.
It was introduced nearly a year after the closure of the nearby Crozer hospital system in Chester, Pennsylvania, that left thousands without nearby access to healthcare.
SB 13 expands financial assistance
Another bill signed into law on Monday expands the pool of patients eligible to receive free and discounted care from the state’s nonprofit hospital systems. Senate Bill 13, sponsored by Sen. Marie Pinkney (D-Bear), examines a program already required by the federal government for nonprofit hospitals to receive tax breaks.
Nonprofit hospitals are mandated by the Internal Revenue Service to provide a “community benefit” to earn their tax-exempt status. Historically, that benefit has been offering free or discounted care, sometimes called “charity care.”
The legislation comes months after a Spotlight Delaware investigation called into question the charity care practices at the state’s largest healthcare system, ChristianaCare.
It also follows a separate effort last summer in which the state paid off medical debts for thousands of Delawareans, despite hospital charity care policies that could have made that treatment free.
Pinkney said during the press conference patients shouldn’t have to choose between treating a medical emergency and their financial stability. She also said the bill would work to address people in the “middle” and that it would apply to both insured and uninsured patients.
“We are making sure that everyday Delawareans who are just trying to stay on the stability that they have built for themselves and their family will be protected through Senate Bill 13,” Pinkney said.
Under the new proposal, all of the state’s nonprofit hospitals would be required to provide free care to patients living below 300% of the Federal Poverty Line, with large discounts for patients in higher percentage brackets.
- Below 300% of the FPL ($46,950 a year) – Full discount
- 300-350% of the FPL ($46,950 to $54,775 a year) – 75% discount
- 350-400% of the FPL ($54,775 to $62,600 a year) – 50% discount
Separately, the legislation allows people living at 500% of the Federal Poverty Line — $78,250 a year — to seek out a 50% discount if the billed expenses are greater than 10% of their income.
SB 1 sets new limits on healthcare costs
The last bill signed on Monday was one of this year’s most controversial bills and drew a fierce rebuke from the state’s hospital systems earlier this spring.
Senate Bill 1, sponsored by Senate Majority Leader Bryan Townsend (D-Newark/Glasgow), would work to lower healthcare spending in the state by investing in primary care and phasing in price caps for hospitals.
In recent years as healthcare spending has exploded, the state moved this year to pass legislation that would reduce its own spending burden by capping how much it would reimburse hospitals for treatments received by state employees.
By taking aim at how high Delaware healthcare providers can negotiate their prices with insurers, in addition to making those insurers spend 11.5% of their medical costs on primary care, the state hopes to better compensate providers proactively working to improve Delawareans’ health outcomes.
The original bill introduced reference-based pricing to medical services covered under both insurance for state employees and some commercial plans regulated by the Department of Insurance. Essentially, this would limit the amount of money a provider could be reimbursed by insurers, tying that amount to a predetermined benchmark.
Prior to the amendments, Delaware intended to set that benchmark at 250% of what the federal government pays providers through Medicare.
Now, those price caps will not go into effect until 2029. Price caps for both inpatient and outpatient procedures would also take effect on a phased basis, with costs not scaling down to that 250% of Medicare level until 2033.
During Monday’s press conference, Townsend said the bill was a “longtime coming” and that in previous years, he and other legislators had worked to pass primary care reforms.
Townsend also addressed the amendments, and how they push the price caps out to 2029, and how in the coming years the Delaware Department of Insurance will have to work on regulations related to those caps.
“One of the challenges with Senate Bill 1 is that the implementation of it takes a few more years to fully ramp up,” he said.
He also thanked Sen. Ray Seigfried (D-Claymont) for challenging lobbying tactics used by the state’s hospital systems, where he called claims by the hospitals that Senate Bill 1 would lead to thousands of job losses as “disgraceful.” Townsend cited the support of Seigfried, who previously was an executive at ChristianaCare, as instrumental in gaining broader legislative support for the measure.
Delaware Department of Health and Social Services Secretary Christen Linke Young ended the press conference by saying the bills would expand access for patients, but also work to bring down the cost of care long-term.
Young also pointed to the work required to get the bills onto Meyer’s desk, and how leaders were able to create a “great deal of consensus” among healthcare leaders that the reforms should have been passed.
“The American healthcare system is deeply flawed, but we have a set of leaders and stakeholders here in Delaware who are committed to doing complicated, hard work to make progress,” Young said.
