Report: Mass. Residents Pay More, Get Less From Health Insurance

BOSTON — If you have the feeling you’re getting less coverage from your health insurance even though it’s costing you more, there’s proof today you’re right.

A state report says our premiums rose 9.7 percent between 2009 and 2011, while the value of that coverage shrank 5.1 percent.

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“What we’ve seen over the last couple of years is that premiums are growing faster than inflation and at the same time, the quality of the benefit is declining,” said Aron Boros, whose state agency, the Center for Health Information and Analysis, published the report. “So you’re not only paying more, you’re getting less.”

The gap between what you get and what you pay is widest for individuals who buy insurance on their own and for small businesses who have fewer people to buffer the impact of health care costs.

There are lots of reasons health care premiums continue to rise. But Boros says there’s one particularly thorny issue here in Massachusetts: We get most of our care at the most expensive hospitals, instead of going to the nearest community hospital for the basic stuff like mammograms, check-ups and routine surgery.

“If you want to contain costs or reduce costs, you have to go after where the costs are,” Boros said. “The vast majority of costs are in high-priced hospitals and physician groups.”

Specifically in Partners HealthCare, which Boros says takes in 28 percent of all payments to hospitals and doctors in Massachusetts. But Partners is also the state’s largest private employer. It and many other high-priced hospitals spawn medical innovations and drive the state’s health care industry.

Proportion of total reported acute hospital and physician paymants by system (2011) (Courtesy Center for Health Information and Analysis)

Proportion of total reported acute hospital and physician paymants by system (2011) (Courtesy Center for Health Information and Analysis)

The report out Wednesday lays the foundation for health care cost hearings this fall run by the state’s Health Policy Commission. Its director, David Seltz, says there will be lots of tough questions for hospitals and physicians, including, “Why are these trends existing, what are they doing to mitigate them in the long term, and what are the places where the commonwealth can help and push this industry to achieve some of those efficiencies?”

Expect the pressure to continue on patients as well to make “smart” choices about where to get care.

“There is a strong push towards getting the patient more involved by providing better tools and better incentives through limited and tiered networks and high deductible plans,” Boros said. “But we’re at the infancy of those things.”

By October, health insurers in the state are supposed to have a website and phone number you can call to get the price of any treatment you need. When you’re choosing where to go, ask how the quality compares as well as the price.

There are a handful of other nuggets that stand out in the report:

  • 39 percent of the payments private insurers make are within a global budget. But enrollment in HMOs, where global budgets are used, is dropping. Is this a sign of patient backlash?  Boros doesn’t know.
  • Blue Cross Blue Shield, Harvard Pilgrim and Tufts Health Plan have 80 percent of the commercial market even though they are the most expensive insurance options in the state. Why aren’t employers trying low-cost options?
  • Half the commercial market is self-insured. This has been true for couple of years, but it’s still surprising.
  • On average, commercial insurers spent $414 per member per month, but among insurers there is a wide range — from $196 at Cigna to $434 at Harvard Pilgrim.

Listen to the audio version of this story below:

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  • guest

    most of massachusetts lives in the greater Boston area where our primary hospitals are academic medical centers. Newton-Wellesley is the only community hospital in my area and that is Partners. I do not think you should ‘blame the consumer’. also there are no good quality measures in this report – there may be quality and safety differences that are not apparent.

  • GCW

    Why doesn’t anyone place the blame where it really belongs . . . on the hospitals whose ridiculous charges represent at a minumum 60% of the cost of healthcare!!!

  • fun bobby

    just a coincidence this is happening at the same time as romneybama care?

  • Alan_Sager

    I listened to your report today and also read it with
    interest.

    Yes, one reason hospitals cost so much in our state is that we rely very heavily on
    major teaching institutions. This has been a gradual evolution over at
    least five decades, I’ve documented. On top of that, if the hospital owns your doctor, it’s hard to go elsewhere.

    The current fashion, urged by the state, to containing cost by providing information about price (which price?) and quality (not easy to measure in ways that are reliable and relevant) may work. But there’s almost no evidence to support its efficacy. One reason is the price and quality might be relevant, if we
    could learn and compare them—but the real cost-related question is often, Do I
    need the care? And there’s no way to educate notional consumers about
    that.

    Tiered networks? Hard, in Boston, where most hospitals are COTH major teaching
    hospitals.

    How about evidence-based health policy? The care we get depends heavily on
    the caregivers we’ve got—and the ones we’ve got are expensive. Not planned—but not prevented, either.

    Now, talking about better information may sound attractive, but maybe it’s main effect (not necessarily its intention) will be to delay for a few more years—or longer—cost controls that might actually work.

    Who benefits from that?

    • http://byrondennis.typepad.com/theabcsofmedicare/ Dennis Byron

      What cost control could possibly work in “a few more years” other than socialized rationed health care — implicit or explicit? Unless you are suggesting that the government control the supply side and ration our demand, it is what it is.

      Massachusetts heating and utility costs are high; winters are cold and the amount of sunlight per day in the winter is limited. No one suggests the state build refineries and start drilling off the Cape and mandate rolling brownouts. (In fact, the suggestion that we simply harvest the wind down here has raised a decade of NIMBY nonsense from the Kochs and other rich snowbirds.)

      Massachusetts housing costs are high; land is limited and there is very little left that is suitable to build on. No one suggests the state take over Toll Brothers and mandate that we all have to live in 30-story high rises in Allston. (Actually I read that there are some crazies suggesting that but no reasonable people are suggesting it.)

      Massachusetts food costs are high; we are at the end of the supply chain and the growing season is short for anything that could be produced here (without using more heat, utilities and land–see above). No one is suggesting the state buy Stop and Shop and Shaws and mandate meatless Mondays.

      But for some reason, people go on and on about health care as if it were different than eating, sleeping in a dry place and being warm.

  • KOVAINANBAN

    Free market healthcare pocketing big health care businesses and Wall Street Investors! Nothing surprising here.

  • J__o__h__n

    I don’t know why businesses don’t support single-payer. There is no way that taxes could rise at this rate every year so costs would have to be held in down.

  • Drew1981

    The whole healthcare system is built on a foundation of sand and it is crumbling apart. We keep using the same design but adding more policies, and laws in a futile attempt to fix it. It is the American way. Politicians, insurance companies and providers are all in bed with each other and have no reason to change anything mainly because they are all exempt from having to deal with the fiasco. When the baby boomers swamp the system with their claims for assisted living, home care and nursing home care you will see the system crumble.

    • http://byrondennis.typepad.com/theabcsofmedicare/ Dennis Byron

      Drew1981

      Just so you don’t confuse anyone here, in general “assisted living, home care and (custodial) nursing home care” are not covered by any of the insurance discussed in the state report nor are they generally covered by Medicare (but if you are in an assisted living facility and you need a doctor, your doctor is most likely covered by Medicare — unless it’s an eye doctor, or a dentist or has something do with your hearing). Medicaid pays for a lot of custodial care but again that is not the subject of the report attached to the article. There are separate policies you can buy that cover some of this long term care but they are totally private arrangements.

  • Cat

    The “low-cost options” are actually just “squeeze more after-tax money out of your employees” options. They provide awful customer service, and often require a “covered” individual to jump through even more hoops to get the coverage the contract technically promises. They are full of little catches designed to deny coverage wherever possible. As with most things, you get what you pay for, and the “low-cost” insurance is generally not worth the still-high price.

    • J__o__h__n

      The customer service will always be awful. They know that the employees aren’t the ones who choose which plan(s) to offer. If you aren’t the one writing the check, you have no leverage. They tell you to call HR and HR tells you to call them.

      • fun bobby

        my wife’s company actually employs a person just to fight with the insurance company. what a sad statement

  • Anne DiNoto

    Why is it surprising that half the commercial market is self-insured? My voice as a consumer is stifled as I get my insurance thru my employer’s self-insured plan.

    • Martha Bebinger

      Hi Anne – I’m surprised that so many businesses feel comfortable taking on the full risk of insuring their employees, but maybe it’s not as risky as I imagine.

      If you had a voice in choosing an insurance plan, is there one cost saving option you like better than others?

      • gingerde

        Hi, Martha, ETAL:

        Businesses who self-insure get a huge tax break. They are also not regulated by the states, but are under the auspices of the Department of Labor (there ARE DOL offices in Boston!) because the self-insured policies are covered under ERRISA. Unfortunately all self-insured plans are administered by huge corporate for-profit entities (big admin costs, plan restrictions, terrible customer “service, poor oversight), like United Healthcare and Anthem BC – and in locations across the country or wherever the self-insured corporate headquarters are located. The whole ERRISSA law, and if The Affordable Care Act has written any consumer protections covering self-insured plans, is a journalists investigative nightmare.

        And BTW, please see “Funding H.R. 676: The Expanded and Improved Medicare for All Act – How we can afford a national single-payer health plan in 2014,” by Gerald Friedman, Ph.D., Department of Economics, University of Massachusetts, Amherst.

  • http://www.judydunn.net/ Judy Dunn

    When are we going to realize that as long as the insurance companies are the intermediaries, we will not be able to control health costs. Single payer makes infinitely more sense than all the costs added to the system by the insurance compaines; their profits, the administrative costs for both the insurance companies, and the providers. This is not rocket science. It is (un)common sense.

    • Paul M

      For folks who think a single payer Medicare model is the way to go. Who do you think processes all the Medicare claims? Insurance companies. The federal government contracts with insurance companies to process the medicare claims. The federal government has no claims processing capability (unless they nationalize the insurance companies). Also, the three largest insurance companies in MA are not for profit. Their ‘profit’ goes into their state required reserves. No shareholders. So the ‘greedy’ insurance companies reaping huge profits does not apply here in MA.

      • http://byrondennis.typepad.com/theabcsofmedicare/ Dennis Byron

        Paul M

        Good points but just so everyone knows how Medicare really works, it is not single payer in practice although it is in theory. The “real Medicare market” (as a Democratic-Party think tanker and the then head of the Urban Institute dubbed it in 1995) requires the senior citizen to work with one, two or three additional insurance companies on top of the insurance company that runs Medicare in his or her geography (which is a division of Wellpoint of California starting October 1 in most of New England)

      • fun bobby

        actually in MA the profit goes to executives and purchasing jets for the executives to fly around in

    • Michael

      If single payer were more efficient, why stop on Health Care, why not propagate this concept on other insurances: car insurance, life insurance, house insurance, ..and then on SSI (this pyramid scheme was designed as insurance, was not it?) — why would not government give pensions to everyone… BECAUSE it will bankrupt the government and produce no incentive for providers to improve their skills and work more efficient and for patients to shop around.

  • J__o__h__n

    This is typical. Rather than working to reduce costs they are blaming the consumers for choosing based on reputation as the only factor. No other criteria is offered to consumers. The cost of any supply, item, or procedure is not transparent or free from containing other costs. When trying to decide whether to get a high deductible plan with no copays (100% paid by me) or higher monthly payments with a lower deductible, I called a local health care provider (Fenway, not Mass General – the ones they claim we should use to lower costs) and they couldn’t even tell me the rate for a single office visit. Romney/Obama care does nothing to control costs. We should have gotten costs under control before expanding coverage. We need single payer instead of this Rube Goldberg subsidized mess.

    • Martha Bebinger

      Hi John – we’d love to hear more about your experiences in calling around for prices. Have you tried to compare the quality of any services or treatment you need?

      • J__o__h__n

        I’m generally healthy and rarely use medical services so I haven’t done much comparing or know what things cost. As the new plan option I was considering had no copays until a deductible, I was trying to find out the cost of a routine office visit and they told me that it varied based on provider and doctor. I consider myself paying for insurance that I don’t use and just hope that I’ll be covered if anything alarming happens.

        • Chris

          I had a similar experience when I needed an X-ray about 5 or 6 years ago. Nobody at the hospital could tell me for sure how much it would cost. It all depended on the number of exposures, the angles, whether the X-ray actually worked or not, etc. They were apparently used to taking X-rays first and figuring out charges later. Because I was going to have to pay for all of this myself, I had to ask the technician to take as few X-rays as possible. Tonight, I looked at the state’s cost/quality comparison site. The cost data are over 2-1/2 years old, and they don’t actually reveal the price of anything. (What good is knowing whether the cost of a procedure is above, at, or below the median if we don’t know the median cost in actual dollars and cents?) Not really useful!

  • http://byrondennis.typepad.com/theabcsofmedicare/ Dennis Byron

    “39 percent of the payments private insurers make are within a global budget. But enrollment in HMOs, where global budgets are used, is dropping.”
    50% of us are self insured and luckily out of the control of these central planners. Almost 40% of us are already in HMOs (but are they counting those in ACOs which are just HMOs with a new name). 20% of us are on Medicare and therefore completely unrelated to the Massachusetts insurance system (except for Medigap). And somehow the technocrats think they can save $200 billion from the rest of you. (I know there is double counting in those numbers. Some of us in Medicare are in HMOs, e.g.)

    “Blue Cross Blue Shield, Harvard Pilgrim and Tufts Health Plan have 80 percent of the commercial market even though they are the most expensive insurance options in the state. Why aren’t employers trying low-cost options?”
    You mean like from for-profit Centene of Missouri, the new revolving door home of former statehouse central planners? The non-snarky answer is because these are the insurance plans our doctors accept (mine just dropped Fallon after 40 years)

    Half the commercial market is self-insured. This has been true for couple of years, but it’s still surprising.
    Why is that surprising. That’s how a reasonable business person avoids all this crazy politicized mess.

    On average, commercial insurers spent $414 per member per month, but among insurers there is a wide range — from $196 at Cigna to $434 at Harvard Pilgrim.
    I can’t wait to see the hard numbers behind that stat. Must be one funny looking bell curve

  • http://byrondennis.typepad.com/theabcsofmedicare/ Dennis Byron

    Why is the report given to the Boston Globe and WBUR before taxpayers? What is being hidden?

    • Richard Hussong

      I expect it is because, as journalists, they knew the report was coming out and jumped on it to get the scoop. If I were trying to hide something, I don’t think I would hand it to any news outlets. Anyway, as a taxpayer, I don’t expect to be mailed a copy of every report prepared by a government agency. I couldn’t recycle them fast enough.

      • http://byrondennis.typepad.com/theabcsofmedicare/ Dennis Byron

        Rihcard

        This being the 21st century I wasn’t suggesting it be mailed anywhere.

        The issue is that it was given to Martha and the Globe purposely 24 or more hours before it was posted. The reason had nothing to do with them getting a “scoop” (another 20th century concept). The idea is that the state propaganda chief in change of this wanted to spin (“there is one particular thorny issue here”) out the idea that this bad news is all Mass General’s fault. That is, if it weren’t for Mass General, the late great RomneyCare would have been a success instead of a now repealed failure.

        The Globe bought the spin totally. Martha to her credit posted four other points at the bottom of this article. (In fact, Martha posted the report here hours before the state put it up on its web site.)

        But no story I’ve seen except perhaps the Statehouse News Service story mentioned years-old data used, the 50% increase in uninsured in two years (10 years and billions of dollars wasted to get back where we started), the over 100,000 people that have lost employer sponsored insurance, the fact that the state again changed the goal posts (the metrics used in these supposedly transparent comparative CHIA/DHCPF reports changes almost every year so that it is impossible for the taxpayer to compare), the fact that the so-called Annual Report on the Massachusetts Health Care Market covers only half that market, and other deceitful practices in the report by the top health care propagandist.

        The points above — and who knows what else — is what I am talking about when I say “what do they want to hide.” This has nothing to do with the mail.