A subcommittee of Delaware’s Economic and Financial Advisory Council agreed to increase its benchmark for healthcare spending growth from 4.2 percent to 4.9 percent for 2027.
The benchmark is on par with projections the group made in December. And it's a policy tool aimed at measuring and limiting the rate of health care spending growth within a state.
Diamond State Hospital Cost Review Board
Delaware Healthcare Association President and CEO Brian Frazee sits on the subcommittee and voted in favor of the new benchmark.
The state passed legislation two years ago to create the Diamond State Hospital Cost review board to oversee hospital budgets. After legal back-and-forth with Christiana Care over the last year, the state and hospital system agreed on a structure for the board.
Frazee said the price caps voted on Wednesday during subcommittee will be important to that structure.
"Because that's what the benchmark is, what we will be held to as it relates to cost growth in hospitals moving forward," Frazee said.
Healthcare spending growth from 2020 to 2023 was capped between two to three percent. But healthcare costs and spending consistently outpaced that metric.
Georgetown University's Center on Health Insurance Reforms says Delaware's benchmarks are not the only ones that have struggled to contain actual spending. In 2023, Oregon, Rhode Island, and Connecticut all recorded their highest growth rates since the implementation of their benchmarks.
The benchmark from this year in Delaware reflects a new methodology implemented in 2025, which includes the three-year average of Delaware personal income growth, state population growth, and growth in the price index for relevant healthcare personal consumption expenditures. It adds to Potential Gross State Prduct (PGSP) the state used previously.
Gary Siegelman, a subcommittee member from Bayhealth, said this new approach reflects Delaware’s current healthcare challenges.
"It doesn't quite represent reality, but it's a lot closer than what we had seen a couple of years ago," he said.
Siegelman added Delaware healthcare systems have to account for population growth and aging, along with technology and labor force costs increases.
The new benchmark will go for approval of DEFAC’s full membership in May.
Subcommittee officials plan to revisit costs later this summer, after the Centers for Medicaid Services publishes its latest data on healthcare prices.
On healthcare spending benchmarks and history of cost control:
The American Medical Association says state and federal government efforts to control hospital costs have existed since the 1920s. And during the 1970s, multiple states had voluntary and mandatory hospital rate setting programs.
In 1983, the US enacted Medicare's Prospective Payment System, which marked a significant shift to prospective payment. It was meant to incentivize hospitals to control costs. But nearly 10 years after its implementation, Medicare caseloads started to get sicker and hospital length-of-stay started to increase.
Delaware's one of eight other states that have implemented healthcare spending benchmarks.
These pull in historical factors driving health spending, use interagency working groups, follow objective data sources, and account for state economic metrics.
Delaware's Department of Health and Social Services says health care spending benchmarks are not a predictor of health care spending. And these are meant to promote affordable healthcare by considering economic factors.
