Members of the Michigan House Government Operations Committee took a hard look at a package of bills championed by Speaker Matt Hall, which if passed, would scrutinize rising health costs by creating a board to review the finances of Michigan hospitals.
Put forth by Hall, of Richland Township, and Reps. Mike Harris (R-Waterford), Jay DeBoyer (R- Clay Township) and Joe Aragona (R-Clinton Township), House Bills 6116–6119 would create a five-member Hospital Cost Review Board to oversee nonprofit hospitals’ budgets and spending.
“If labor costs have risen, hospitals should be able to demonstrate that,” Harris told committee members on Thursday. “If pharmaceutical costs, medical equipment or other operating expenses increased, they should be able to demonstrate that as well. What the patient deserves is confidence that higher prices are tied to higher costs, not simply passed on because they can.”
While insurance companies cannot simply raise their premiums without regulatory review, this proposed board would apply the same principle to nonprofit hospitals, Harris explained.
Under the legislation, the board’s five members would be appointed by the governor and the majority and minority leaders in each chamber of the Michigan Legislature, with expertise in health care, health policy, business, finance or accounting.
As part of its duties, the board would meet with nonprofit hospitals to discuss their budgets and would analyze a host of information on their operations, utilizations and any tax exemptions the facility receives.
Among the required information hospitals would need to submit each year, they can provide explanations on how increased costs on drugs and medical devices, labor cost or any other relevant factors led to higher hospital charges.
House Bill 6116 also sets standards for price increases, requiring hospitals to justify price increases for health services while capping those increases at the rate of inflation.
If the bills are signed by the governor, hospitals would have 14 days to reduce the total cost of services covered by insurance by 10%.
The policies would also create a healthcare cost grant program, intended to support rural hospitals operating at a loss of at least 3% for three consecutive years, which would be funded by fines collected from hospitals that do not comply with the law, and fees collected as part of the consolidation process.
“I recognize this legislation asks significant questions of our healthcare system,” Harris said. “It should. Healthcare is one of the largest expenses facing Michigan families, employers, and taxpayers alike. We owe it to the people that we represent to examine whether that system is delivering the transparency, competition and the accountability that they deserve.”
Testifying before the committee, Adam Carlson, the senior vice president of advocacy for the Michigan Health and Hospital Association, told members that health costs are tied to several factors, including hospitals, insurance companies, the pharmaceuticals industry and clinicians.
However, Carlson said the package only targets one of those areas, and that it places arbitrary conditions on how these facilities provide care.
Hospitals are facing rapidly rising costs, Carlson said, pointing to pharmaceutical prices as the leading driver.
While there are 27 hospitals in the state operating with negative margins, these bills would immediately push an additional 27 hospitals into the red, Carlson said, pointing to the 10% price cut, restrictions keeping prices at or below the rate of inflation and required cost benchmarks within the bills as a serious threat.
If passed as is, Michigan hospitals can expect to see $2.3 billion in losses, with 21,600 full-time hospital workforce jobs lost statewide, Carlson said.
“I want to be very clear about this, because this isn’t just individuals who are sitting around who lose their jobs, these job loss numbers represent service line reductions,” Carlson said. “It represents the closure of urban units, the closure of behavioral health units and potentially the closure of hospitals.”
For the association’s rural members who are operating on unsustainable margins their best options are to either convert to a for-profit model, or sell to private equity, which will only accelerate the growth of private equity in healthcare, Carlson said.
“I don’t think that was the goal of the bills, but that’s the practical implication of what’s going to happen under this legislation,” he said.
However, Bret Jackson of the Michigan Health Purchasers Coalition argued hospitals have their own role in the rising costs of healthcare.
“The cost of hospital care has become one of the biggest drivers of rising health insurance premiums, high out-of-pocket costs, and wage pressure for employees throughout our state,” Jackson said.
Jackson pointed to a report from his organization, which found the average hospital operating profit margin among Michigan hospitals was 16% in 2024, up from 12% in 2023. According to the report, 80% of Michigan hospitals operate as nonprofits.
“Employers are struggling to provide quality health benefits to their employees,” Jackson said. “Every single dollar that goes towards unnecessary high hospital prices and fees is a dollar that cannot be used for employee wages, hiring, retirement benefits or business growth. For many Michigan families, it means higher deductibles, delayed care and increased medical debt.”
The committee adjourned without voting on the bills.
