Michigan hospitals tell House committee staffing shortages, drug prices and supply costs are driving health‑care prices

At a House Insurance Committee hearing, Michigan Health & Hospital Association leaders told lawmakers that workforce shortages, higher drug prices and rising supply costs are the primary drivers of hospital expenses and threaten access to services in parts of the state.

"Michigan hospitals are more than health care providers. We're cornerstones in the community," said Elizabeth Cutter, senior director of government and political affairs for the Michigan Health & Hospital Association (MHA), during the presentation. She and Laura Pell, MHA executive vice president for government relations and public policy, described workforce, drug pricing and supply disruptions as the main cost pressures facing hospitals.

The association told committee members that Michigan hospitals employ more than 220,000 people and delivered roughly $10.4 billion in tax revenue last year, and that its members reported about 23,000 job vacancies as of early 2025. Cutter said labor costs make up approximately 56% of a hospital's total expenses and that nursing remains the largest single category of vacancies.

The MHA also highlighted national drug‑price trends and local examples. Cutter said median prices of new drugs entering the market in 2023 topped about $300,000 and cited data showing established drug price increases well above inflation. Pell described episodes of severe shortages that raised acquisition costs dramatically: a hospital pharmacist who normally paid about $11 a dose for cisplatin bought a three‑week supply for roughly $550 a dose during a shortage.

The association explained how charges and payments differ: hospitals record a standard charge for a service but accept negotiated payments from commercial insurers and set government program payments (Medicare and Medicaid) at federally determined rates. "We must charge everybody the same thing," Pell told the committee, referring to federal billing rules, and added that payments accepted vary by payer and by negotiated contracts.

Lawmakers pressed MHA on an analysis reported in the Detroit Free Press that compared billed charges across hospitals. Chair Harris read the article's findings — that charges for identical medications varied and that some posted markups approached 800% — and asked the association to explain. Cutter said the association was unable to replicate the analysis from the dataset cited in the article and suggested methodological problems, including inconsistent treatment of inpatient vs. outpatient pricing and system transitions after hospital acquisitions.

Committee members asked about the federal 340B Drug Pricing Program, which allows eligible hospitals to buy certain outpatient drugs at discounted rates. Cutter said 340B discounts let nonprofit hospitals and other qualifying providers reduce the net acquisition cost of outpatient drugs and use the resulting margin to support community health needs, charity care and services not otherwise covered — for example, keeping rural labor and delivery units open or providing $0 copay cancer care at some centers. Cutter added that 340B is not federal taxpayer spending but a relationship between manufacturers and qualifying providers, and she told lawmakers the association sees limited prospects for substantial federal change in the near term.

Members of the committee sought follow‑up materials and actions. MHA agreed to provide health professional shortage area (HPSA) and medically underserved area (MUA) maps, its annual community impact report and examples of charity care and community benefit programs. The association also said pharmacists and members spend significant time ensuring compliance with federal 340B rules.

Rep. Fitzgerald and Rep. Leitner moved two routine committee actions: approval of the May 21 minutes (motion by Rep. Leitner; no objection was recorded and the minutes were approved) and a motion to excuse absent members (motion by Rep. Fitzgerald; the adjournment followed the motion). The presentation itself produced no new votes or policy adoptions.

The MHA urged state lawmakers to consider policies that support workforce development (including community college–university partnerships, scholarship and loan repayment programs, and additions to the Reconnect program), measures to protect and retain health‑care workers and actions that preserve access in rural and high‑need areas. Cutter and Pell also called attention to administrative burdens such as prior authorization and other payer requirements that hospitals say add cost to care delivery.

The association described other steps already taken with the legislature: pandemic‑era appropriations that supported nursing retention and recruitment, capital funding for educational space and expansion of Reconnect eligibility to some health‑care credentials. The MHA also cited community investments: it said hospitals contributed more than $4.5 billion last year to community impact projects, including mobile clinics, transportation and housing support, food pharmacies and behavioral health programs.

Committee members asked for further briefings on specific topics, including a planned follow‑up on hospital charity benefits to federally qualified health centers (FQHCs) and a future discussion of regulatory and administrative mandates that members believe raise costs. The MHA said it would follow up with requested materials and examples.

Ending: The hearing ended with requests for documents and offers by the MHA to provide data visualizations and examples; no substantive committee policy changes were adopted during the session.