LANSING, Mich. (WZMQ) – Republicans in Michigan’s House of Representatives introduced a four-bill health care package Thursday aimed at dramatically lowering hospital costs for Michigan families and businesses, including legislation that would create a new government board with authority to review and cap hospital pricing.
The centerpiece of the package would establish a five-member Hospital Cost Review Board housed within the Department of Licensing and Regulatory Affairs. The board would be empowered to review the finances of non-profit hospitals, including executive compensation, revenues, liabilities, labor costs, and the value of their tax exemptions, and approve or reject proposed rate increases. Under the legislation, no price increase could exceed the rate of inflation.
“We propose to create a new board that will be looking at the finances of all of these hospital systems and ensuring that they do not have rate increases in the future that are higher than the rate of inflation,” Hall said at a press conference Wednesday.
Under the bills, non-profit hospitals would also be required to cut their total prices by 10 percent within 14 days of the legislation taking effect. Hospitals that refuse would lose their non-profit tax status and their exemptions from sales, use, and property taxes. Hall argued that those exemptions represent a significant public subsidy that hospitals have failed to pass along to patients.
The package also places new limits on patient charges. Non-profit hospitals could not bill uninsured patients more than 150 percent of what Medicare would pay for a given service, and insured patients could not be billed more than 200 percent of the Medicare rate.
Hall pointed to Indiana, where a Republican-controlled legislature passed similar reforms, as a model. He pushed back on the notion that the legislation conflicts with free-market principles, arguing the health care industry is too intertwined with government intervention for market forces alone to drive down costs.
“If they want that privilege of not having to pay sales and use tax and not having to pay property taxes, which shortchanges our schools and our local governments, then they should be more affordable,” Hall said. “They have a choice. They can pay taxes or they can lower their costs.”
The bills also take aim at hospital consolidation. Any proposed merger or acquisition would require board approval, and rates would need to fall by at least 2 percent before a deal could be authorized. The legislation would further prohibit any single hospital system from controlling more than 8 percent of statewide hospital bed share or 15 percent of a regional market.
The package includes a grant program for rural and critical access hospitals experiencing sustained operating losses, a provision that Hall highlighted as the closure of Sturgis Hospital in southwest Michigan underscored ongoing financial pressures on smaller facilities. Qualified hospitals that have posted a negative operating margin of at least 3 percent for three or more consecutive years would be eligible to apply.
“If the state is collecting revenue from corruption in the healthcare system, we have to ensure those dollars are reinvested to support the most vulnerable parts of our healthcare infrastructure,” said Rep. Mike Harris (R-Waterford). “Rural hospitals throughout Michigan struggle to survive while large corporations continue to increase their profits.”
The bills were referred to the House Committee on Government Operations. Hall said he is hopeful Democrats will join the effort to advance it through a divided legislature.
