Mass. Health Insurance Premiums Bounce Back To Highest In Country

(Source: The Commonwealth Fund)

Massachusetts is #1 again, but not in any way the state will celebrate. We have the highest health insurance premiums in the nation again, according to this annual report from the Commonwealth Fund. Massachusetts bounced back to the top again in 2011 after dropping to 9th place in 2010.

The report does not analyze why Massachusetts is back in first place, but notes that in general, health care costs are higher here because we have more generous benefits, our cost of living is higher overall, and our health care prices tend to be higher.

An important caveat: That high cost of living, and our higher incomes, need to be factored in. If you look at our premiums as a percentage of median household income, we’re actually on the low side: 18% compared to a national average of 22%. (See chart below.)

Still, this bump from 9th back to 1st is bad news. It’s also politically significant. Last year, hospitals and business leaders used this drop in health insurance costs (relative to the rest of the country) as proof that the market was working to curb health care spending. And, they argued, the drop to 9th place meant the state did not need to impose new controls. Leaders made this argument in the heat of legislative debate about what to include or leave out of the health care costs bill Governor Deval Patrick signed in August.

So what do those leaders say now?

It was unrealistic to assume that Massachusetts could maintain that kind of enormous progress each year, says Mike Widmer, president of the Massachusetts Taxpayers Foundation.

“The reality is that Massachusetst has made considerable progress in reining in the rate growth rate of health care costs,” adds Widmer. “But our challenge may be greater than we anticipated.”

And does the state need some of the tools that were left out of the new health care costs law now that the picture doesn’t look so optimistic?

No, says Widmer. The law still gives the state enormous latitude and tools to tackle rising health care costs. The key, says Widmer, will be getting the right data to clarify what’s really going on. “Where is the progress, where are the sticking points, and what can we do to help?”

Answering these questions will be up to the state’s new Health Policy Commission, which meets again next week.

More of the general overview from Kaiser Health News:

The price of commercial health insurance has risen five times faster than family incomes since 2003 even as the financial security it offers has shrunk, says a new Commonwealth Fund report that underscores how medicine is consuming bigger and bigger parts of the private economy. … The average total cost of family health insurance — employer and employees’ shares — hit $15,022 last year, up 62 percent since 2003, while the median family income rose only 11 percent during the same period, the report said. If that trend continues, premiums for family coverage will come close to $25,000 by 2020.

(Source: Commonwealth Fund)

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  • Virginia

    The ONY thing that will stop this outrage is single payer health care. I don’t know about all of you, but the truth is that for-profit insurance and drug companies are bankrupting all of us. I cannot not see that our division of insurance is doing much about it either.

  • Bob Carey

    The report shows half the equation.
    The benefits (i.e., what’s covered and member cost sharing) offered by Massachusetts employers are significantly richer than the coverage offered by employers in the rest of the country. While there has been a shift to plans with upfront deductibles over the past few years, Massachusetts employers still offer health insurance to their employees that provides richer coverage (i.e., less member cost sharing) than employers in the rest of the country.
    In addition, unlike most states, Massachusetts insurance law doesn’t allow medical underwriting in the small group market. This means that employers who are priced out of the market in Alabama or Nevada or Kentucky are able to purchase coverage here. In MA, the health of an employer’s employees doesn’t affect the employer’s premiums. While this drives up the average cost of insurance for everyone, it also means that employers can actually buy health insurance for their employees and aren’t excluded from the market. In these and many other states, an employer with an employee diagnosed with cancer can’t afford to purchase coverage because the premiums are unaffordable. This certainly helps reduce the average cost of insurance, but at what cost?
    I’m certainly not saying we don’t have a health care cost problem, but premiums alone tell only part of the story.

  • Dennis Byron

    The “merged market” and the reduction in Massachusetts of over 100,000 employees being covered by employer sponsored insurance (ESI) after the implementation of RomneyCare skews the time-series results in the report (which are the most important results).

    This methodology looks weak on the face of it (why just ESI?) but unless some normalization occurs to account for the merged market, comparisons with other states are not meaningful at all. Other states probably had a drop in ESI due to the economy so there may be some legitimate comparison there. But no other state had the switching to individual insurance because of RomneyCare that Massachusetts had because no other state had RomneyCare.

    Also, the methodology section is unclear on where the data came from, but this research appears to suffer from the same problem as the former? bi-ennial AHIP studies of states’ individual premiums: it looks like they get the data from the employers, not the employees. So it doesn’t appear to account for how some spouses just work to carry the insurance and other take up issues.

    Still no one will argue with the general finding: stuff is expensive in Massachusetts: taxes, heating oil, higher ed, major league sports tickets… car insurance, home insurance and health insurance.

  • Evan Pankey

    Ultimately health care spending is largely driven by patient/consumer behavior. Our health care reform has no direct incentive for consumers to reduce their health care risks.E
    We need a patient/consumer “credit score”.Eva

    • Martha Bebinger

      Evan – does anyone do this? Is there a model for patient/consumer credit scores? Could I create one for myself? Could you?

      • Evan Pankey


        I don’t know of any insurers currently using pbulicly available scores in health care per se But we are seeing movement in that direction with employee health care incentive programs and discounts. Clayton Christensen mentioned the concept of a health score in “the Innovator’s Prescription”. However many consumers are aware of scores for credit and points for car insurance. The concept is the same.

        A health Score could be created by using things like: HbA1c, blood pressure, cholesterol measures, fasting insulin, completing preventive appointments (colonscopy, mammagrams, standard vaccinations). These are some of the same metrics used for Pay for Performance metrics.

        Without incentives for individuals, I don’t think we can stop people from running up high costs when they acquire a preventable chronic condition. We are all currently paying collectively for this externality.

        I think a personal health score is a practical policy opportunity here in MA.

        • Martha Bebinger

          Very interesting – have to think of a way to follow up on this – thanks!