State Spending Growth Benchmarks and Hospital Revenue, Hospital Prices, and Premiums

Area of Science:

• Health economics
• Health policy analysis
• Healthcare finance

Background:

• Since 2013, nine states have implemented health care spending growth benchmarks to control costs.
• States monitor performance against these benchmarks, with potential penalties for noncompliance.
• While growth often exceeds benchmarks, the approach might slow spending compared to no intervention.

Purpose of the Study:

• To assess the association between health care spending growth benchmarks and spending outcomes.
• Evaluating the impact of state-level benchmark policies on healthcare costs.

Main Methods:

• Population-based case-control study utilizing event study models.
• Compared hospitals and counties in states with benchmarks against entropy-balanced comparators in non-implementing states (2015-2025).
• Analyzed hospital net revenue, county-level prices, and market premiums using data from CMS, RAND, and CCIIO.

Main Results:

• No statistically significant changes were found on average for hospital revenue, prices, or market premiums.
• A total of 4813 hospitals and 3108 counties were included in the analysis.
• Rhode Island showed a statistically significant $55 reduction in outpatient prices associated with benchmarks.

Conclusions:

• Scant evidence suggests health care spending growth benchmarks significantly reduce hospital revenue, prices, or premiums.
• Additional policies or stricter enforcement may be necessary for benchmarks to meaningfully impact health care spending.
• The study highlights the need for robust policy design to achieve cost-containment goals.