Trevor Putnoky is the CEO of the Healthcare Purchaser Alliance of Maine, an employer-led nonprofit representing approximately 150,000 commercially insured lives in the state.

Currently, hospitals in Maine have commercial prices that are on average more than 250% what Medicare pays for the exact same service. In some cases, the amount that employers and consumers pay exceeds 400% what Medicare would reimburse. Those high prices lead directly to higher insurance premiums and co-pays for the people of Maine.

The high cost of health care in our state is not a new problem, but with premiums up an average of approximately 18% for small businesses this year and health care spending now comprising approximately 10% of household budgets, the issue of health care affordability can no longer be ignored. 

In 2024, the average premium for a family plan in Maine totaled over $25,000 — nearly a third of our median household income. As a result — according to a recent survey from Consumers for Affordable Healthcare — nearly 40% of Mainers are now skipping or delaying going to the doctor when they are sick due to cost. 

There are lots of factors driving the increasing cost of health care, and there’s justifiable frustration with nearly all the stakeholders in our health care system over their contributions to cost increases, but research has consistently found that hospitals are the largest contributor. Here in Maine, per-capita hospital expenditures have grown at more than 3.5 times the rate of inflation and more than 6.5 times the rate of household income since 2001, and the primary driver of hospital cost growth over that time has been increasing prices, not utilization. 

Hospitals have long argued that they have to charge high commercial prices to offset lower payments from Medicare and Medicaid (MaineCare), but independent studies consistently find that the prices hospitals charge have little or no connection to their share of public-pay patients.

Instead, it is a hospital’s market power that drives price increases. As health systems continue to consolidate here in Maine, it’s perhaps little wonder that price increases have been so substantial. Insurers have virtually no leverage to get large systems to constrain price growth because they must include those systems in their networks to meet network adequacy requirements.

To address the outsized impact that hospital prices have on Maine businesses and families, the Legislature will consider LD 2196, a bill that would cap how much hospitals can charge for services (tied to Medicare rates) and how much prices can increase from year to year.

It would also redirect a portion of the resulting savings to increase resources for primary care and behavioral health. Finally, the bill seeks to lessen the burden of prior authorizations for patients and providers, which have been a considerable source of frustration.  

While reining in excessive hospital prices and realigning spending toward high-value services like primary care and behavioral health are critical to the long-term sustainability of our health care system, we all recognize that many Maine hospitals face significant financial challenges.

Any policy of this magnitude must balance affordability with continued access, and LD 2196 seeks to do this by exempting rural critical access hospitals and hospitals in financial distress from the price caps. It also includes a phased approach that allows hospitals to reduce prices over time. These are important protections that grant hospitals the runway needed to improve operational efficiency.

The state has a key role to play in helping hospitals improve. Maine recently received significant Rural Health Transformation Program funds, with $100 million earmarked to aid efficiency efforts over the next five years. These dollars can be leveraged to provide hospitals with the resources, expertise and tools they need to make meaningful efficiency gains. 

Our state’s hospitals deserve tremendous respect for the vital care they provide to our communities, but the current trajectory of unchecked price growth is not sustainable for the people and businesses of Maine. LD 2196 isn’t just about cutting costs. It’s about choosing a more stable and affordable future for Maine’s health care system.

All of us have had to tighten our belts to accommodate rising prices, and it’s time we align hospital prices with the reality of what Maine families can afford.