According to national health expenditure data, the U.S. trend of increased health care spending continued in 2023, growing 7.5% higher than in 2022 to $4.9 trillion, with expectations for higher spending in 2024. High and rising prices of hospital in- and outpatient services, as well as for prescription drugs are outpacing the growth of other goods in the economy and contributing to the climbing health care costs. The same national data further notes spending increases for both public (by approximately 8%) and private health insurance (by 11%). As medical care prices rise, so do the costs of health insurance, affecting states, employers, and consumers.
State legislators continue to pursue policies that aim to address health care costs. Although not all state legislatures convened in 2024, and some for only a short session, NASHP tracked more than 750 bills introduced for both prescription drug pricing and hospital/health system costs. The following summary highlights the range of strategies considered last year.
- Regulating pharmacy benefit managers (PBMs) continues to be a theme across states, with policies that span increasing transparency of contract language and/or changing drug prices to the prohibition of spread pricing to explicitly extending state anti-trust reviews to include them. Policy goals include ensuring consumers have access to the most affordable prescription drugs that reflect all rebates, equitable payment across pharmacies, particularly independent pharmacies, and more.
- Notably, in 2024, Idaho, Vermont, and Washington enacted comprehensive PBM legislation that includes a number of these provisions.
- Increasing provider competition and oversight of the health care market to address consolidation was a top policy trend of the bills introduced related to hospital and health system costs.
- Indiana and New Mexico enacted new market oversight laws requiring notice and review of proposed mergers or acquisitions of hospitals. As in previous years, state policymakers considered changes to certificate of need (CON) laws with some bills that sought to expand CON reach, while others restricted it. Some officials are concerned that CON creates barriers to new providers entering the market, but others believe that, without it, they will have enough visibility into the market. So even though strategies differ in how CON should be used, states share the goal to increase competition and address consolidation.
- Reducing certain prescription drug costs by restricting out of pocket expenses for consumers at the point of sale and/or ensuring all costs to the consumer are counted toward their health plan deductible.
- New York eliminated cost-sharing for insulin covered by commercial plans, and Washington is one of the first states to enact out-of-pocket caps for prescription asthma inhalers and epinephrine autoinjectors covered by health plans in the state.
- Lowering prices through varied policies.
- Connecticut extended its prohibition on facility fees for telehealth health services, while Oklahoma enacted using reference rates to reimburse out of network ambulance providers. Vermont’s legislature has directed a study on designing and implementing a prescription drug review board to regulate the cost of prescription drugs.
The 2025 state legislative sessions have begun, and there are already hundreds of bills introduced that aim to address health care costs. NASHP continues to track both prescription drug pricing and hospital and health system cost legislation so states and other stakeholders can stay abreast of these evolving efforts. Our trackers will be regularly updated with new and progressing legislation in the coming weeks and months, so check back for updates.
