Hospital spending bill passes House

A bill requiring hospitals to meet spending limits passed the House April 26 after a marathon session that stretched into the night.

House Bill 350 passed 21-16 with four absent to create a seven-member Diamond State Hospital Cost Review Board tasked with annually reviewing hospital budgets to keep costs down. 

The bill’s sponsor, Speaker of the House Rep. Valerie Longhurst, D-Bear, said she put the bill together because of skyrocketing hospital costs, the state’s largest healthcare-related expense.

Hospitals that exceed spending limits set by the state would have three years before the board would take punitive action. Psychiatric and rehabilitative hospitals are exempt from review.

“If hospitals are able to keep that spending growth at or below the benchmark, they will not need to submit a budget for review,” Longhurst said. “This legislation is not about punishing hospitals … but to put a system in place to slow down the skyrocketing costs that we have experienced in Delaware. Our current system is not sustainable.”

Longhurst said benchmark spending set by the state has been 3% to 4% growth over the previous year, but healthcare spending has exceeded by as much as 11% growth.

The bill puts in place a mechanism to control growth, focusing on hospitals because 42% of all healthcare spending in the state comes from hospitals.

“It’s just hospitals,” Longhurst said.

In 2021, Longhurst said, healthcare spending was $3.5 billion – a 9.3% increase since 2019. Hospitals profit about 40% more than the national average.

“We do not know where this money is going,” she said.

Yet, she said, $30 million has been spent acquiring healthcare systems in Maryland and Pennsylvania. “Those are dollars that came from our constituent pockets and are being spent to build facilities out of state,” she said.

Rep. Valerie Jones Giltner, R-Georgetown, said Delaware’s self-managed healthcare plan allows a third-party administrator, Highmark, to pass through charges. “They’re not negotiating rates,” she said.

This includes pharmaceutical costs, which, she said, are skyrocketing because of the use of Ozempic, a drug that many are using to lose weight.

“Shame on us, Delaware. We have not managed our healthcare plan and have kicked it down the street,” she said.

Following the vote, Minority Leader Rep. Danny Short, R-Seaford, a member of Delaware Economic and Financial Advisory Committee, said the group has a recommended spending limit that the state has blown through by as much as 62%. 

“We’re imposing a benchmark on a private industry when we can’t make our own benchmark,” he said. “I think we’re moving in the wrong direction when we can’t do what we’re saying we want others to do.”

The vote was largely down party lines with Rep. Stell Parker Selby, D-Milton, one of the few Democrats voting against the bill. Rep. Pete Schwartzkopf, D-Rehoboth Beach, was absent, and Rep. Valerie Jones Giltner, R-Georgetown, and Rep. Bryan Shupe, R-Milford, both voted against the bill. No Republican voted for the bill, and two upstate legislators were absent.

The bill now heads to the Senate Executive Committee.