On Tuesday, the House Health Committee will consider several bills that critics say are likely to raise insurance costs for consumers.

North Carolina ranks among the most expensive states in the country for healthcare. The Tar Heel state is one of eight in the United States where the average potential cost of healthcare surpasses $8,000 annually, according to a report from The Commonwealth Fund.

North Carolina is among the states with the highest healthcare costs as a percentage of median income, tied with Georgia for the sixth highest out of 50 states. Average potential healthcare costs in the state amount to 13.8% of the median North Carolina income.

The following bills are awaiting approval from the House Health Committee, several of which will be voted on Tuesday morning:

  • H.B. 246 Revise Pharmacy Benefits Manager Provisions: This bill restricts the use of preferred pharmacy networks and mail-order pharmacies and implements mandatory dispensing fees. Bill opponents argue this would undermine pharmacy benefit managers’ ability to control drug costs and manage their pharmacy networks, increasing prescription drug costs for consumers and reducing quality. Specifically, they argue, the bill mandates payment levels that would incentivize higher drug costs, increases dispensing fees by upwards of 1,000%, and removes the ability to reimburse pharmacies based on quality and outcomes. 
  • H.B. 649 Ensure Timely/Clinically Sound Utiliz. Review: This bill weakens the utilization review and prior authorization processes that insurers use to monitor cost and quality of care. Bill opponents argue this leads to increased costs and has the potential to reduce quality of care by removing a process to ensure services are both medically necessary and priced appropriately.
  • H.B. 450 Pharmacist Provided Health Care Services: This bill would impose a mandate requiring that pharmacists be reimbursed at the same rate as advanced practice medical professionals for performing equivalent healthcare services. Bill opponents argue this would mean bigger profits for pharmacy chains and higher costs for patients. The bill also requires reimbursement for out-of-network services provided by pharmacists, which undermines networks used by health plans to deliver lower costs.
  • H.B. 654 Pharmacists/Vaccine Admin./Test and Treat: Similar to H.B. 450, this bill would also require insurers to reimburse pharmacists regardless of whether they are part of the insurer’s network, which opponents argue will likely lead to increased drug costs.
  • H.B. 560 Diagnostic Imaging Parity: This bill would mandate that millions of dollars be added to the healthcare system and encourage misuse and overuse of tests. For example, breast MRIs are more expensive for patients and more profitable for providers. The bill also goes against the recommendations of the U.S. Preventive Services Task Force. 
  • H.B. 680 Improved Access to SMI Prescription Drugs: This bill would remove a health plan’s ability to conduct reviews to ensure the safety and affordability of prescriptions for severe mental illness (SMI). The reviews are used to help prevent adverse drug events and medication errors that could harm patients. The reviews also ensure patients receive the best value for their healthcare dollar by helping guide them to equally effective options when available. House Bill 680 would allow pharmaceutical companies to push new branded products that may not have any better value or appropriateness than the unrestricted alternatives. 

Peter T. Daniel, executive director of the North Carolina Association of Health Plans, argues that these bills increase the cost burden on small businesses and consumers.

“All these bills are health insurance mandates, which increase health insurance premiums and put the largest burden on small businesses and individual consumers,” said Daniel. “State mandates also take away choice from individuals and small businesses about the kind of insurance they want to buy — or can afford — and reduce access to healthcare.”

House bills 649, 654, and 680 were filed within eight days of the filing deadline. The bill proponents aim to get the House to vote on their proposed bills before Thursday, May 4, which is the deadline for the bills to be sent to the Senate. However, before the bills can be voted on, they must first be heard and discussed in their appropriate committees they pass through.

Jordan Roberts, director of government affairs for the John Locke Foundation, also argues that these bills will increase consumer health insurance costs.

“Benefit mandates and regulations on insurance products usually result in dispersed costs and concentrated benefits for policyholders,” said Roberts. “Often put forward with good intentions, lawmakers must consider how these new insurance regulations will impact those who pay for health insurance and may be stuck with the costs — namely small businesses and employees.”

Pharmacy Benefit Managers, or PBMs, are “third-party companies that function as intermediaries between insurance providers and pharmaceutical manufacturers,” according to a definition from the National Association of Insurance Commissioners. “PBMs create formularies, negotiate rebates (discounts paid by a drug manufacturer to a PBM) with manufacturers, process claims, create pharmacy networks, review drug utilization, and occasionally manage mail-order specialty pharmacies.”

Roberts argues that PBMs often deserve scrutiny, but this does not mean lawmakers should increase regulations on private businesses.

“Companies conduct business with PBMs voluntarily, and they serve a purpose in an already highly regulated healthcare market,” said Roberts. “If lawmakers intend to regulate PBMs further, there should be careful consideration not to pick winners and losers in the market. There is plenty of protectionism already in the health care industry.”

Rep. Wayne Sasser, R-Stanly, a lead sponsor on several of the bills, argued that some regulation on PBMs is necessary because of spread pricing, noting that PBMs made many billions of dollars last year from this practice, the biggest of which he said made $14.4 billion in 2022.

H.B. 246 “eliminates what’s called spread pricing, which the PBM middle-men make most of their profit, is the difference between what they charge the employer or the entity that pays for the prescription and what they pay the pharmacist to fill the prescription,” Sasser said. “Spread pricing does not flow back to who bought the insurance.”

Sasser said the bill also regulates the rebates PBMs charge the drug manufacturer to get their drugs on the formulary.

“If you’re not on the formulary, then you don’t get your drugs paid for by the particular insurance [company],” Sasser said. “So it has nothing to do with which drugs are the best drugs to treat an illness or disease. It’s all about who wants to pay the highest rebate to get on that formulary. All that does is drive up drug costs.”

Sasser does not think that House Bill 246 would lead to increased prices for prescription drugs.

“You don’t see any HBMs, which would be hospital benefit managers,” Sasser said. “You don’t see any physician benefit managers. You only have pharmaceutical benefit managers, because they were able to break out the pharmacy benefit part and not have any oversight.”

Sasser also said that House Bills 450 and 680 are unlikely to move and that H.B. 654 has turned into H.B. 712, which he said has no opposition.

In 2020, the U.S. Supreme Court ruled 8-0 against PBMs in a case where a group of PBMs argued that states should not be allowed to regulate them, opening the door for states to impose these types of regulations.