There’s a lot to criticize about the last-minute process that left the Massachusetts Legislature passing 110 pages of complex health care legislation the night before New Year’s Eve. But at least lawmakers got it done.
Two major bills — one on health care market oversight and another on prescription drug costs — landed on Governor Maura Healey’s desk Monday. Although neither is perfect, Healey should sign the bills into law.
The drug bill is important because pharmaceuticals are the fastest-growing segment of health care spending in Massachusetts, and the average amount a patient spends on medication is increasing. In 2023, one in 10 Massachusetts residents reported they or a family member went without prescription medication because of cost.
The newly passed legislation does what this board has called for — it brings pharmaceutical manufacturers and pharmacy benefit managers under the Massachusetts Health Policy Commission’s health care cost trends process. This process currently provides oversight and transparency of insurers and hospitals. Extending it will require drugmakers and PBMs to provide financial reports to state regulators and let regulators produce public reports about drug pricing, bringing much-needed transparency to the industry. Representatives of these groups would have to testify at a public hearing.
Unlike with insurers and hospitals, though, there would not be any mechanism to hold drugmakers or PBMs accountable for adhering to a particular level of cost growth.
Notably, the bill doesn’t substantially change how PBMs can operate, although it would require them to obtain a Massachusetts license with some rules related to conflicts of interest. PBMs have been accused of various practices that extract profit while driving up drug prices. But increasing transparency is a good first step that will give policy makers insight into what additional reforms are needed. Congress may also impose national rules governing PBMs.
Another major change is the bill would require insurers to cover one generic drug used to treat diabetes, asthma, and the two most prevalent heart conditions without cost-sharing and to cover one brand name drug for those illnesses at no more than $25 for a 30-day supply, beginning July 1, 2025. Consumer advocacy organization Health Care for All has been pushing this policy to make drugs more affordable for common chronic conditions that disproportionately impact people of color and low-income people.
That’s an important goal. But the problem with mandating insurance coverage without limiting drug prices is the policy simply shifts costs from consumers to insurers, and increased insurer costs are passed on to all consumers through higher premiums. The Massachusetts Association of Health Plans estimates that the new rules would increase pharmaceutical spending for all premium payers by about 1 percent annually.
State regulators would be required to review the no cost-sharing program every two years. While there will likely be pressure from patient advocacy groups to increase the drugs for which cost-sharing is prohibited, regulators will have to carefully weigh the benefits of increasing access to drugs against the increased costs borne by all consumers paying expensive premiums.
The market oversight bill is important because, as Steward Health Care’s bankruptcy showed, existing state laws are inadequate to ensure health care facilities are financially stable. Essentially, this bill expands existing mechanisms for state oversight to cover all the players involved in the modern health care system and the myriad types of transactions that occur. It would bring additional state reporting requirements and scrutiny of transactions involving private equity firms, real estate investment trusts, and management service organizations.
Steward loaded hospitals up with debt by selling the properties its hospitals were sitting on, then charging hospitals rent. This legislation prohibits the sale-leaseback of a hospital’s main campus and requires hospitals to disclose lease information in licensing applications.
The bill would jump-start a statewide health planning process, giving the Health Policy Commission authority to analyze what health care services are needed in what regions of the state.
Acknowledging the increasing burden on consumer finances, the bill requires the Division of Insurance to consider consumer affordability in approving health insurance rates. But neither bill does anything to actually contain health care costs.
One problem with the Legislature’s procrastination is there is no opportunity for back and forth with the governor, whose only options are to sign the bill or let it die, since the Legislature concluded its session. And there are complexities — and potentially politics at play — in these bills.
For example, in reforming the Health Policy Commission, the Legislature removed the state auditor’s power to appoint three members, giving that power to the governor with input from the Legislature. Auditor Diana DiZoglio, who has a rocky relationship with the Legislature that she is trying to audit, said this change stymies independent oversight and “constitutes blatantly self-serving and unadulterated retaliation to take power from my office and instead give it to yourselves.”
(A spokesperson for House Speaker Ron Mariano said there would not be less oversight, since the auditor’s appointments do not audit. “This legislation ensures that members of the HPC board or appointing authorities have active roles in the oversight of the state health care system. It redistributes the appointments given to the State Auditor and removes the seat held by the Secretary of Administration and Finance in favor of the Commissioner of Insurance,” the spokesperson said.)
That power play is not reason enough to sink the legislation, though. And neither is the fact that the bills don’t really take on costs. State Senator Cindy Friedman (D-Arlington), who cochairs the Joint Committee on Health Care Financing, described the package in remarks on the Senate floor as “a first step.” The next step will be monitoring these reforms and continuing to examine what additional changes are needed to control costs and limit business practices that don’t prioritize patients.
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