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E&C frames health price push as economic necessity

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Jan 31, 2024
Rep. Cathy McMorris Rodgers at a House E&C hearing.

Rep. Cathy McMorris Rodgers at a House E&C hearing. Photo: Chip Somodevilla/Getty Images

The House Energy and Commerce Committee is refining its pitch for a health cost transparency package as nothing short of an economic necessity.

Why it matters: The panel's first health hearing of 2024 today featured stark Congressional Budget Office projections showing how future health care spending will increase debt and budget deficits.

  • Meanwhile, Chair Cathy McMorris Rodgers portrayed Medicare policy changes in the legislation, like site-neutral hospital payments, as a way to bring new efficiencies to the health program.

What they're saying: "The site neutral conversation is not an exercise in cutting hospitals," McMorris Rodgers said. "It's really about how to more efficiently structure Medicare so that patients and taxpayers are not overpaying for the same services to subsidize loss leaders."

  • It remains to be seen how much such arguments carry weight in the Senate, which has been lukewarm on the site-neutral push.

By the numbers: Chapin White, CBO's director of health analysis, zeroed in on health insurance subsidies at the committee's request, and how they're a key driver of federal spending.

  • For fiscal 2023, ACA subsidies are projected to total $1.8 trillion dollars, or 7% of GDP.
  • Federal subsidies for health coverage will total $25 trillion over the next decade.
  • That includes $11.7 trillion for Medicare, $6.3 trillion for Medicaid and CHIP, $5.3 trillion for employment-based coverage and $1.1 trillion for the ACA marketplaces.
  • "Partly because of those subsidies, federal outlays over the next three decades are projected to grow faster than revenues, leading to ever larger deficits and debt," White said.
  • He said that under current law, outlays for the major federal health programs would increase from 5.8% of GDP in 2023 to 8.6% in 2053.

Of note: Site-neutral payment changes came up multiple times during the hearing, with proponents predicting that reforming the way Medicare pays for outpatient care would have a domino effect in health markets.

  • Benedic Ippolito, a senior fellow at the American Enterprise Institute, argued for a broader reforms than the House transparency package, which is limited to physician-administered drugs.
  • "One of the important things to remember is that if you fix site-neutral payments, you have this big spillover into markets outside of Medicare," he said.
  • Sophia Tripoli, senior director of health policy at Families USA, said the policy changes would not only reduce incentives for hospitals to buy up physician practices but keep the patients in a lower cost care setting where the quality of care is the same or better.

Yes, but: CBO still estimates that price transparency provisions would only modestly lower health care spending — and that more sweeping changes would be needed to move the needle on government savings.

  • White said that CBO's assessment of price transparency policies would lead to price reductions between 0.1% and 1%, while policies to promote competition among providers would lead to price reductions of 1 to 3%.
  • "Price reductions of 3 to 5% or more would be possible under policies to cap the level or growth and prices made to providers," said White.

What we're watching: Republicans and Democrats in the House have different ideas about how to squeeze more efficiencies out of government health programs. And even the narrow site-neutral push is drawing strenuous opposition from hospitals.

  • McMorris Rodgers talked about how vision insurance has consolidated and vertically integrated, resulting in higher costs for patients.
  • Ranking Member Frank Pallone mentioned oversight of Medicare Advantage payments while Rep. Anna Eshoo talked about expanding on the Inflation Reduction Act's Medicare drug price negotiations to more medicines.
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