Congressional Budget Office pitches healthcare price growth cap

Capping the level and growth rate of healthcare prices could result in "moderate to large" reductions in the prices health insurers pay to providers, the Congressional Budget Office said in a Sept. 29 report. 

The CBO said the prices that commercial insurers pay for hospitals' and physicians' services are much higher on average and have been rising faster than those paid by public health insurance programs. 

"Those rising prices — rather than growth in the per-person use of healthcare services — are an important driver of recent increases in premiums for commercial health plans," the CBO said in the report. "Higher premiums in turn increase the amount that individuals and employers pay for health insurance coverage and increase total federal subsidies for commercial health insurance."

The CBO suggested three policies federal lawmakers could implement to cap the level or growth of prices:

1. Setting maximum amounts that hospitals and physicians could receive from commercial payers. 

2. Capping the annual growth rate of those prices. 

3. Taxing services whose prices exceed certain maximum amounts. 

The CBO said capping both the level and annual growth of prices in all markets would decrease prices by either a moderate percentage (3 percent to 5 percent) or a large percentage (more than 5 percent) in the first decade compared with the projected path of prices under the current law. The exact size of the reduction would depend on the level of the caps, among other things. 

Federal lawmakers could also address high prices by drafting legislation promoting competition among providers and price transparency, according to the report. 

Read the full report here

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