Each year, the Health Policy Commission (HPC) board establishes a health care cost growth benchmark for the next calendar year. Unless modified by the HPC, the health care cost growth benchmark is equal to the growth rate of the “potential gross state product.” While the process involves input from economists and other experts, the Secretary of Administration and Finance and House and the Legislature jointly determine the growth rate of the potential gross state product.

For more than a decade since the law’s inception in 2012, the potential gross state product has always been determined to be 3.6% despite varying future and past measures of the state’s gross domestic product. This bill reforms the reference benchmark that is used to inform HPC’s health care cost growth benchmark to be based on historical state economic growth rather than an arbitrary process. A historical growth rate in gross state product would be calculated using the most recent ten-year period and would serve as the default health care cost benchmark subject to HPC modification and approval.