NEW CASTLE – The Diamond State Hospital Cost Review Board is grappling with the First State’s continuing trend of increasing health care expenditures following the release of the 2023 spending benchmark report.
Delaware reported a 9.1% increase in per capita year-over-year health care spending in 2023. It is the third year the row in which the First State saw increases that surpassed the health care spending benchmark, which was set at 3% by the Delaware Economic and Financial Advisory Committee. Per capita spending can be discovered by dividing the total amount spent by the population number which increased by 1.3% in the same year.
The amount of money spent per Delaware resident came out to $10,588 with the total health care expenditures reaching just under $11 billion in 2023, according to the report.
Frederick Gibison, Jr., a partner at the North America office of global consulting firm Mercer, discussed the report with board members during a meeting on May 13. The group also analyzed Delaware’s total medical expenses, which is included in the expenditure numbers but is a little more fine-tuned and doesn’t include insurance premiums.
Hospitals, both inpatient and outpatient, accounted for 37.1% of the state’s total health care expenditures, according to both Gibison and Delaware Health and Social Services. Pharmacy, physician and long-term care costs coming in second, third and fourth, respectively.
While the hospital costs eat up the largest portion of those expenditures, it wasn’t the largest increase realized. In year-over-year changes, inpatient hospital costs, without pharmacy costs, combined with outpatient costs, increased collectively by 29.9%, reaching $280 million. Pharmacy costs (net of rebates), involving both prescription drug benefits and medical benefits, came to a whopping $301 million, or roughly a 32.2% increase.
When questioned by board members, Gibison went on to explain that those numbers should not include unpaid medical expenses which are generally assumed by the health care systems through community giving.
The presentation to the board showed that the majority of those funds are paid out by Medicare with commercial payers coming in second and Medicaid following suit as a close third. That’s despite seeing more growth in the commercial market than the other two categories, according to consultant Michael Bailit of Bailit Health.
Bailit added that even though Delaware has seen continual per capita growth in health care spending, the numbers show that such growth is similar to that seen in other states frequently monitored by Delaware leaders.
Between 2022 and 2023, Massachusetts recorded a 8.6% increase in per capita spending, while Connecticut showed a 7.9% increase. Rhode Island reported a 7.8% increase.
Digesting the numbers in a different way, Bailit also said that Delaware’s average statewide annual growth has been the highest over the last five years between the four states. In comparison, Massachusetts grew its population by 5% in the same five-year span while Connecticut and Rhode Island saw less growth at 3.5% and 2.8%, respectively.
All the five states realized similar growth patterns over those years between commercial, Medicare and Medicaid categories.
After hearing the report, the board carried on with conversations focused on how they plan on enacting the regulations required by House Bill 350, the bill that established the board in the first place in hopes of reducing hospital-related medical costs. Members discussed the timing by which a hospital must submit its budget as required for review and what exactly should be submitted, but no decisions on draft regulations were made during the meeting and copies of any proposed regulations were not made available to members of the public at the meeting.
Several board members, including non-voting member Delaware Healthcare Association President and CEO Brian Frazee, highlighted these questions as a benefit to having hospital representatives participate in the conversation.
“The hospitals are well represented here,” Member David Singleton said, nodding at Frazee, “but I think we need their input.”
Dr. Devona Williams agreed, adding, “We need a dialogue to make sure we’re being practical in what we’re requesting.”
Frazee mentioned the importance of health care leaders participating in the review of any measures to be taken so they have a voice in the matter. However, Board Chair Richard Geisenberger said the document crafted to support the drafting of regulations was not available for such review at this time.
“This is literally working papers . . . not for public review at this point,” Geisenberger said during the meeting, adding that the general public will have the opportunity to comment on such regulations once they are publicly published in the Delaware Register of Regulations for review.
In the meantime, he added that the pending court case filed by ChristianaCare and others should have a resolution before the next board meeting. That upcoming board meeting will take place June 10 from 10 a.m. until 12:30 p.m. at the same location with a hybrid option for those who would like to participate virtually.
