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States looking to cap hospital rates

In this illustration, a needle forms part of an increasing green line that mimics a stock market line.
Illustration: Rebecca Zisser/Axios

Some states are trying to control health care costs by tying hospital payments in their state employee health plans to the amounts Medicare pays, Kaiser Health News reports.

The other side: This is a nightmare scenario for hospitals, which usually charge private insurance plans several times more than they get from Medicare.

Details: Hospitals say Medicare underpays them, and they must charge private patients more to recoup the costs.

  • States experimenting with these measures include North Carolina, Montana, Oregon and potentially, Delaware.

Reality check, from Axios' Caitlin Owens: Hospitals are doing very well financially, although it's also true that many rural hospitals — which have a lot of Medicaid patients — are already struggling.

What they're saying: "Government workers will get it first, then everyone else will see the savings and demand it," Glenn Melnick, a professor at the University of Southern California, told KHN. "This is the camel's nose. It will just grow and grow."

Go deeper: How hospitals protect high prices