State Health Care Cost Commissions: Their Priorities and How States' Political Leanings, Commercial Hospital Prices, and Medicaid Spending Predict Their Establishment

Abstract

Policy Points States are concerned about rising health care spending, and this study identifies states that have established health care cost commissions and describes the political and economic factors associated with their establishment. As of August 2024, 17 states had established commissions to reduce the growth of health care spending using various methods, including setting spending growth targets. Politically Democratic states and those with higher commercial hospital prices and higher Medicaid spending were more likely to establish such commissions. Because federal health care reform is difficult to enact, states are enacting their own reforms, tailored to their needs and political feasibility.

Context: States are becoming increasingly concerned about rising health care spending because it crowds out budgets for education and other obligations and it burdens consumers, exposing them to medical debt and bankruptcies. This study identifies states that have established health care cost commissions (HCCCs), examines state-level political and economic factors associated with their establishment, and reports which of these states have also enacted health care competition-related laws that further equip these commissions.

Methods: To identify states with HCCCs and competition-related laws, we reviewed prior reports, supplemented by our own research on state websites and from organizations that track state-level legislative and executive activity in health care. We estimated a regression model to understand how political and economic factors are related to these commissions being established.

Findings: As of August 2024, 17 states had established HCCCs that aim to reduce the growth of health care costs using a variety of methods, such as collecting health care use and spending data and setting spending growth targets. States that lean politically Democratic were more likely to establish these commissions, particularly those states with higher commercial hospital prices or higher Medicaid spending as a share of the state budget, or both. States with HCCCs have also enacted competition-related laws but to varying degrees.

Conclusions: Because health care reform is difficult to enact at the federal level, many states are enacting their own reforms, tailored to their needs and political feasibility with many establishing HCCCs to limit health care spending increases. Future research should study the impact of these commissions on health care spending that increases short-term spending yet moderates long-term spending, including the feasibility and impact of increased spending on primary care services as well as the impact of spending on new health care technologies.

Keywords: Medicaid spending; health care spending; hospital prices; state health policy; state regulation.