Advocates say a bill that would cap how much hospitals in Maine can charge insurers for various services would make health care more affordable. Hospital executives say the measure, if passed, would result in closures and cuts to services.

State Rep. Drew Gattine, D-Westbrook, the bill’s sponsor, said the aim is to reduce health care costs without cutting services. He said he believes “rising hospital costs are contributing to the affordability crisis we are having.”

But Dr. Guy Hudson, Northern Light Health’s president and CEO, said Maine’s health care systems are financially “fragile” compared to those in most states.

“This is not going to solve the increased cost of health care in Maine,” Hudson said. “It’s going to add to the problems here.”

The bill, LD 2196, would cap hospital prices charged to private insurance companies at 200% of Medicare reimbursement rates. The hope is that capping what hospitals can charge insurance companies for various services would help control the premiums private insurers charge to customers.

But Medicare and Medicaid reimbursement rates often don’t cover the actual cost of hospital services, experts say. Hospitals make up the difference by charging private insurance companies more.

Dr. Andy Mueller, CEO of MaineHealth, the largest health care system in Maine, said its revenue would decline by about $650 million per year if the bill passes.

“The only way we would survive without becoming insolvent is by letting go of a third of our workforce — 8,000 of our 24,000 workforce would have to be cut,” Mueller said. “There would be a drastic reduction in the amount of services we provide.”

Gattine said he collaborated with the Office of Affordable Health Care, an independent agency created by the Legislature, in writing the bill. A presentation by the office to lawmakers last week noted that recent surveys showed one-third of Maine residents have skipped or delayed going to the doctor because they were worried about health care costs.

“I think it’s time we have a serious conversation about how hospitals are managing their costs,” Gattine said in an interview. “I see a lot of evidence that hospitals are well-off institutions that seem to be able to invest in what they want to invest in.”

A public hearing on the bill has not yet been set.

Gov. Janet Mills is reviewing the bill and has not yet taken a position on it, according to her office.

ADVOCATES SAY COSTS ARE UNSUSTAINABLE

The prices hospitals charge can vary depending on which hospital a patient goes to, according to the Office of Affordable Health Care’s analysis. In one example, a knee replacement at Northern Light Mercy Hospital in Portland cost $50,319, while the same surgery at MaineHealth Maine Medical Center in Portland cost $66,694.

Limiting outlier charges — when the cost of a procedure at one location is much more expensive than a similar procedure at another — is a goal of the legislation, said Maureen Hensley-Quinn, senior director at the National Academy of State Health Policy, a national think tank.

“It’s trying to set a high ceiling for very high-cost claims,” Hensley-Quinn said.

Hensley-Quinn said similar laws, if carefully crafted — such as those passed in Oregon, Indiana and Rhode Island — can help rein in costs while not harming hospitals’ bottom lines.

She said of those three states, Indiana’s law — which also caps prices that hospitals can charge insurers — is most similar to what Maine is proposing. Hospitals there don’t have to comply until 2029 and there has been debate about what the law’s impact on hospitals will be, according to news reports.

“The costs employers and individuals are seeing in their health insurance are not sustainable over the long term,” Hensley-Quinn said. “If something doesn’t happen to address the underlying costs of health care, more and more people will lose their health coverage.”

Gattine said the health and human services committee will hear from all sides when it hosts a public hearing on the bill in the coming weeks. He said he’s hopeful a balance can be struck.

“You can’t lower costs without doing something to lower costs,” Gattine said. “We have to figure out what the right tipping point is.” 

HOSPITAL EXECUTIVES CONCERNED

Hospital executives say they are struggling under current conditions to maintain financial stability and have had to cut services in recent years.

Among the cutbacks, Northern Light Health closed Inland Hospital in Waterville in 2025, MaineGeneral Health shuttered the Edmund N. Ervin Pediatric Center last year, and a string of maternity wards in Maine have closed over the past decade.

Cuts to Medicaid, set to take effect in 2027, and the elimination of some of the Affordable Care Act tax credits this year, will put further financial pressure on hospitals, executives said.

In many cases, hospitals charge private insurance more than 200% of Medicare rates, hospital officials said. Hudson said Northern Light Health’s revenues would plummet by $220 million if the cap went into effect, calling it a “catastrophic” loss.

“We would have to be very selective in what services we could maintain,” Hudson said.

He said the cap “would completely take down Maine’s health care system. It’s just not a system that has a reserve.”

Mueller said services that could face cuts at MaineHealth would include the neonatal intensive care unit at Maine Medical Center in Portland and MaineHealth Behavioral Health at Spring Harbor hospital. He said other hospitals in the network would be at risk of closing.

Kate Ende, policy director for Consumers for Affordable Health Care, said some hospitals would be exempt from the requirements. These include rural critical-access hospitals, which are often small hospitals in rural areas that receive higher Medicare and Medicaid reimbursement rates, as well as financially distressed hospitals.

Ende said another bill provision would mandate higher reimbursement rates for primary care and outpatient behavioral health.

Katie Fullam Harris, chief government affairs officer for MaineHealth, said the higher reimbursement rates for primary care and behavioral health would do little to offset the revenue losses.

“We are all in agreement that we need to address the cost of health care,” Harris said. “Affordability is a serious problem. But this bill does not address the cost of health care.”