(The Center Square) – Health care industry leaders in Washington state are growing concerned about price controls on providers and increased taxes on physician groups and hospitals, which could lead to further increased costs and a lack of consumer access.
At a June 3 meeting of the Health Care Cost Transparency Board, several industry officials made it clear that some recently passed state legislation may be undermining the board’s goal of controlling health care costs.
Significant increases to the business and occupation tax enacted through House Bill 2081 were cited, which could impact physician groups and hospitals, potentially driving up costs. Also mentioned was House Bill 1123, which is seen by some as imposing price controls on government-insured people that could lead to cost shifting onto commercial payers, effectively increasing their costs.
“Hospitals are not doing well, and we believe it’s going to get worse,” said Chelene Whiteaker, senior vice president of government affairs at the Washington State Hospital Association.
Chelene Whiteaker with the Washington State Hospital Association urges changes on price controls and other regs hurting hospitals in WA
She told the board that cost caps on what hospitals can charge for services, combined with other regulations, have most hospitals in the red.
“Hospitals cannot absorb cuts. We have low or negative operating margins,” Whiteaker continued. “If there were another COVID pandemic that hit right now, our hospitals would not be able to operate like we did and save the lives of so many Washingtonians with the care that was provided.”
Add in new laws and taxes passed by state lawmakers this year, she said, and the immediate future is bleak.
“If we continue to cut hospitals like we saw in the state Legislature this year,” Whiteaker said, “we will be forced to reduce service or close and consolidate.”
Jeb Shepard, director of policy at the Washington State Medical Association, also painted a less-than-rosy picture of the health care industry.
“The operating budget relies on an increase in the business and occupation tax, coupled with the base rate increase … the cumulative effect will be a B&O tax increase on physician groups of 40% since 2019,” he explained.
Shepard noted that declining reimbursement rates for Medicare and Medicaid and stagnant or declining insurance reimbursements will only worsen the situation.
Elizabeth New, director of the Center for Health Care at the free-market Washington Policy Center think tank, told The Center Square she hopes board members listen to the experts, because majority party Democrats in Olympia seemed unwilling this past session.
“Regulations increase the cost of care, and even if they’re great – meaning well-intended regulations – health care costs money, and when you take away payments or increase taxes … it’s like a tube of toothpaste: it just comes out somewhere else because it’s got to go somewhere,” she said.
She predicted that insurance premiums would go up next year, in large part because of what lawmakers did this session.
“When we see premium increases in 2026, we can in part thank lawmakers for requiring more cost shifting to go on in the health care industry, and it’s going to increase taxes and it’s going to increase regulations,” New said. “We’re going to pay for it somehow.”
She was also critical of the board, suggesting the body is not fulfilling its mission.
“They were supposed to help consumers be able to see health care cost prices, which I’m fully on board with, but what they’ve been doing since 2020 is establishing which costs are increasing and setting benchmarks for how much they should increase and should not increase,” New said. “So, I think it’s just the wrong focus. There’s a whole host of reasons health care costs money, and the reason why we don’t have cost containment. I think the biggest part of that is that we have a third-party healthcare system where we don’t have people knowledgeable or with a stake in the game.”
The Health Care Cost Transparency Board was established in 2020 through House Bill 2457, “with the purpose of reducing health care cost growth and increasing price transparency,” according to the Washington State Health Care Authority’s website.
The board is comprised primarily of health care purchasers, including representatives of consumers, businesses and labor, whom the governor appoints.
