States weigh hospital price caps

Several states are weighing legislation this year to impose various types of price caps on hospitals.

The new legislation followed three states that enacted hospital price caps in 2025.

Maine

A price cap push in Maine appeared to stumble in recent days after legislation requiring price caps on hospital services was amended.

The bill (LD 2196) would require hospitals to cap prices for hospital services at 200% of Medicare rates.

However, the Maine HHS committee amended the bill earlier this month to replace the price caps with more limited provisions to cap price increases for individual insurance plans, small group plans and the state employee health plan. Those categories include about 150,000 residents, according to the Maine Office of Affordable Health Care.

The Maine Hospital Association (MHA) strongly opposed the bill as introduced and argued it could cut $1.2 billion in hospital revenues and jeopardize hospital stability.

“This bill assumes hospitals are operating with excessive margins that can simply be cut without consequences,” said Andy Mueller, MD, CEO of MaineHealth, the largest health system in the state. “That is not the reality. The scale of reductions contemplated in LD 2196 would force us to dismantle essential services that Maine people depend on every day.”

Delaware

Delaware Senate Majority leader Bryan Townsend, a Democrat, introduced a bill (SB 1) earlier this month to cap the percentage hospitals charge relative to the Medicare reimbursement rate. It would limit prices for hospital services to 250% of Medicare rates unless the hospital or health care system is in a state global budget. Such global budgets use a predetermined, fixed annual budget to care for their patient population.

Supporters of the bill cited a RAND Health report that found 2020-2022 Delaware hospitals’ average commercial prices were more than 300% of Medicare prices.

The Delaware Healthcare Association (DHA) said the bill would cut $413 million in healthcare services for Delaware hospitals and risk 4,000 jobs.

“We need healthcare solutions that will close the gaps, not close hospital doors. The reference-based pricing policies in Senate Bill 1 will lead to decisions no one wants to make: Layoffs and even fewer services in high-needs areas of our state,” said Brian Frazee, president and CEO of DHA. “This takes Delaware healthcare backward. We’ve already said ‘no’ to these bad policy decisions in HB 350, and we have to come together and say ‘no’ to SB 1.”

The bill’s 250%-of-Medicare cap on hospital rates for fully insured plans and those in the state health plan markets. But it will cause self-insured plans to migrate to the fully insured plan market, according to the DHA. And that effectively will apply the rate cap to all health plans in Delaware.

DHA stated that hospitals already are the only type of healthcare entity accountable under the state’s healthcare spending benchmark through the creation of the Diamond State Hospital Cost Review Board in 2024 (HB 350).

New Jersey

Legislation (A 1729) in New Jersey would cap hospital price increases, among other provisions.

That bill was considered in the last legislative session, where it made it out of committee before it was dropped.

The bill would create a Health Care Cost Containment and Price Transparency Commission to establish yearly price increase caps on hospitals. Violations would result in civil penalties and a ban on collecting medical debt from patients.

It was pushed by various groups, including influential state employee unions, as needed to control high healthcare cost increases in the state.

“As we start the new year, more families are facing the terrifying reality of living without the safety net of insurance, due to being priced out of the public marketplace, and those who do have coverage are staring down higher out-of-pocket costs and a greater portion of their income going towards health insurance,” stated officials of the union-backed New Jersey Coalition for Affordable Hospitals.

The New Jersey Hospital Association (NJHA) opposed the legislation and underscored payers’ roles in driving up healthcare costs.

“Capping prices sounds simple, but hospitals aren’t commodity markets,” Cathy Bennett, president and CEO of the NJHA, said in an emailed statement. “Blunt price controls don’t fix what’s driving costs — soaring drug prices, insurance red tape, historic inflation – they just shift where the pain lands, and patients feel it first.”

Vermont

A Vermont bill (S 190) would require the state’s Green Mountain Care Board (GMCB) — a state-appointed body overseeing the healthcare sector — to implement reference-based pricing (RBP) for hospitals by hospitals’ FY27. The board will limit reimbursement to hospitals for small business and individual health plans to 250% of Medicare. The GMCB estimated it will reduce hospital revenue by $50 million.

The bill aims to accelerate and expand RBP beyond the framework established by a 2025 law. It would do that by setting mandatory, concrete and time-sensitive limits on what hospitals can charge insurers, generally tied to Medicare rates.

The bill advanced out of the Vermont Senate Health and Welfare Committee on March 17.

The Vermont Association of Hospitals and Health Systems (VAHHS) decried the adverse financial costs of price caps on its member hospitals. VAHHS also underscored to legislators that its member hospitals are committed to eliminating $330 million in operational expenses by FY28. Hospitals already have reduced expenses by $230 million for FY26 and have pledged to find savings of $50 million in each FY27 and FY28.

“We hear the legislature’s concerns around the viability of the small group and individual market and would like to continue working with the Green Mountain Care Board on a solution that will create affordability for Vermonters while allowing us to continue to serve them,” Devon Green, senior vice president of policy and strategy for VAHHS, said in an email.