Ken Dolkart, MD FACP, lives in Grantham.

What we pay for hospital care is anyone’s guess. When the bill arrives, charges vary with that year’s employee-sponsored health insurance or whether you were laid off and uninsured. The affordability of an MRI varies by whether your “benefits” include a thousand-dollar deductible or if you turned 65 yesterday. The availability of an operating room time for a knee replacement is not related to how disabled you might be, but whether you’re on Medicaid.

Despite laws promoting transparency, hospital billing is opaque because of how it’s determined. This is the status quo of the health industry.

Historically, managed care insurers dominated and could dictate annual “capitated” prices for hospital services. Hospitals realized they could command higher prices by expanding and consolidating into multi-specialty systems, so to expand their “market share” of those covered by the insurers. Negotiations over hospital pricing are conducted behind closed doors, and administrating all of this varied billing is a huge chunk of U.S. outlier health costs.

Private insurers pay more for services than Medicare or Medicaid. The ACA’s 80/20 rule mandates insurers to spend at least 80% of revenue from premiums on health care. Such insurers have little incentive to keep hospital prices down since their percentage of profit remains the same, and as service costs climb, they simply raise premiums and deductibles to maintain profit. Between 2000 and 2019 general price inflation averaged 53%, but employee premium contributions ballooned 243%.

New Hampshire has consistently higher premiums for large and small group markets than both the U.S. average and New England states. Witness New Hampshire property taxes attempting to keep up with health benefits for teachers and employees. It’s not just premiums that make New Hampshire an outlier. In 2020, New Hampshire insurance deductibles for Group Markets averaged 19% higher than average deductibles in the U.S.

Quality is altered by gaming for revenue. Commercial insurance compensation for specialty services range 10% to 330% higher than Medicare rates. Hospitals make the best margins from elective surgical and subspecialty procedures. Hence, all the ads for knee replacements and heart bypass surgery. Rates for cognitive services, such as treating diabetes and preventing bypass surgery or depression via primary care or psychiatry, are reimbursed barely above the Medicare reimbursement. Hospital-multi-specialty megaliths view primary care as a “loss leader” in their financial decisions. This, despite primary care being recognized as the only specialty in which more practitioners improve longevity, equity and the health of a population. Preceding health workforce burnout from the pandemic, New Hampshire increasingly lacks primary care clinicians and the preventive care that keeps people well and out of the hospital.

Unlike other New England states, New Hampshire has no overall strategy to manage the explosion of our healthcare costs. An ambitious interstate compact is being introduced in HB 353-FN to create a publicly-funded, privately-delivered healthcare program. In lieu of single payer, a less ambitious HB 319 brings stakeholders together, within the context of the Legislature, to study an all-payer system.

All-payer designates a state-authorized agency to transparently, publicly coordinate negotiation between hospital and all insurers for services and procedures. A yearly global budget is set for inpatient and outpatient services of each hospital, based on historical spending trends, with goals of limiting cost increases, disincentivizing unnecessary over-use of services, and improving health outcomes for communities served. Different hospitals might receive different rates based on hospital characteristics (a tertiary-care teaching hospital will have different costs than a 25-bed hospital in Woodsville or Berlin.)

Maryland introduced the all-payer total cost of care model in 2014 with waivers from CMS for including Medicare and Medicaid. In 2019, Medicare spending fell 2.8%, driven by a 4.1% reduction in hospital expenditures, with lower overall health spending statewide. In 2020, the model reduced hospital spending by $2.5 billion and cumulative care by $1.6 billion, without reduction in quality. Insurance premiums for private insurance are lower than the national average and Maryland has the 4th lowest deductibles for single coverage, while New Hampshire is 49th highest in deductibles.

All-payer models increase reimbursement for Medicaid and Medicare patients on par with other insurers, so revenue lost on reduced payments by private insurers is balanced, while incenting acceptance of Medicaid and eliminating issues with “payer mix.” During the pandemic, when patient volumes dropped due to a halt in elective surgeries and other COVID restrictions, the total cost of care model helped stabilize revenue.

This decade, hundreds of small hospitals in rural communities have closed across the country. Such communities have lost manufacturing, have more elderly patients on Medicare and more folks with low-wage jobs on Medicaid rather than employer-sponsored insurance. This unfavorable “payer mix” results in low revenue and has shuttered rural hospitals and limited services. In New Hampshire, 9 hospitals have closed their labor and delivery units, doubling the driving time to reach obstetrics care. Pennsylvania recently created an all-payer model of global budgets for Pennsylvania’s rural hospitals for this reason.

No health system model is perfect, but currently upward spiraling costs and declining primary care availability is unsustainable. HB 353-FN proposes comprehensive single payer care via an interstate compact to achieve affordable, universal coverage. HB 319 proposes a legislative study committee for an all-payer system. Write the Commerce Committee and your representative to take responsibility for mitigating the structural weaknesses of our over-corporatized health edifice. New Hampshire must take necessary steps to achieve a sustainable, affordable, equitable and trusted health system.

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