NC has America’s most expensive healthcare. Here’s how we fix that.

Carolina Journal - Nov. 24, 2024

On Election Day, voters returned strong GOP majorities to the North Carolina General Assembly, while at the same time electing a Democratic governor.

That means our state government will remain divided when newly elected officials are sworn in next year.

In a divided government, both parties must look for common ground. And healthcare costs are one area that demands bipartisan attention.

According to Forbes, North Carolina is the most expensive state for healthcare in the country. This fact should not sit well with anyone, regardless of party affiliation.

The amount businesses and families pay for health insurance is a direct result of how much they are charged for things like going to the doctor, receiving care at a hospital, or filling a prescription.

Federal law requires that 80 to 85% of health insurance premiums go directly towards paying for healthcare. If your premium is $1,000 then your health insurer must use at least $800 of it to pay for healthcare. If your health insurer doesn’t use the $800 on healthcare expenses, then you get a rebate, and your premiums should go down.

By law, if healthcare costs less, premiums must be lower. So, if lowering healthcare costs means lower premiums, the question becomes how state lawmakers can bring costs down.

Thankfully, there are meaningful steps our elected leaders can take to address the problem.

1. End hidden fees and charges

Hidden costs like hospital facility fees charged at non-hospital settings drive up costs by billions. Hospitals that own independent practices are charging patients hidden hospital fees to use it. This has been compounded by a wave of hospital consolidations and acquisitions.

Families and businesses should not pay hospital fees when they do not use the hospital.

2. Address surprise out-of-network bills

Surprise out-of-network bills can happen for several reasons.

Disputes between hospital systems and health insurers can cause network disruption. Labs can be sent to out-of-network facilities. Patients can go to an in-network hospital and, while there, be seen by an out-of-network doctor.  

When out-of-network care is provided, there is no limit to what patients can be charged. On top of that, North Carolina law mandates that, in many situations, hospital systems and provider groups be paid whatever they charge.

This creates a big affordability problem.

When provider groups know they can stay out of network, charge whatever they want, and be paid, it drives premiums up.  

In these situations, consumers, through their premiums, will often be forced to pay a highly inflated rate to keep provider groups in network and avoid unlimited out-of-network bills.

The federal No Surprises Act was supposed to fix this problem, but some hospital groups have sued to undermine the law. Now it is bogged down in the courts.

This is an opportunity for state leaders to step in. Patients should be protected, and the threat of large out-of-network bills should not be used to secure higher reimbursement rates that raise premiums.

Transparent and fair out-of-network billing will result in commonsense patient protections, significant cost savings, and downward pressure on premiums.

3. Tackle drug costs

Nearly a quarter of every dollar collected for health insurance goes to pay for prescription drugs. That is more than hospital stays, ER visits, or trips to see the doctor. New drugs are hitting the market with multi-million-dollar price tags.

There are steps that state lawmakers can take to reduce out-of-pocket prescription drug costs, including expanding the use of coupons offered by pharmaceutical companies. Pharmaceutical companies often offer patients coupons to help them afford more expensive brand-name medications.

They are often only offered, however, to patients with commercial insurance and only up to the point they meet their deductible. After their deductible is met their premiums must cover the full costs.

By making sure coupons are offered regardless of insurance or deductible status, North Carolina lawmakers can make expensive drugs more affordable to more people and lower premiums overall.

4. Say no to mandates

Mandates make healthcare more expensive. Yet every year, we see more and more introduced.

This year, one mandate proposed a new pharmacy tax that would be paid every time you filled a prescription.

Another mandate would have forced individuals and businesses, through their insurance premiums, to pay for medical services that were redundant, unnecessary, overpriced, or even unsafe.

Many more have been introduced. Thankfully, none of these became law. But too many are still on the books. These should be studied to see if they are needed. When new mandates are introduced, their cost impact should be studied before they are allowed to proceed.

High healthcare costs are an added tax on businesses and families that impacts everything from hiring and wages, to retirement savings. Thankfully there are areas where a divided government should be able to find bipartisan ground and lower healthcare costs for businesses, workers, and their families.