A First-Year Victory In The Mass. Fight To Control Health Costs

(Source: Center for Health Information and Analysis)

(Source: Center for Health Information and Analysis)

Two years ago, Massachusetts set what was considered an ambitious goal: The state would not let that persistent monster, rising health care costs, increase faster than the economy as a whole. Today, the results of the first full year are out and there’s reason to celebrate.

The number that will go down in the history books is 2.3 percent. It’s well below a state-imposed benchmark for health care cost growth of 3.6 percent, and well below the increases seen for at least a decade.

“So all of that’s really good news,” says Aron Boros, executive director at the Center for Health Information and Analysis (CHIA), which is releasing the first calculation of state health care expenditures. “It really seems like…the growth in health care spending is slowing.”

Why? It could be the pressure of the new law.

“We have to believe that’s the year,” Boros says, “that insurers and providers are trying their hardest to keep cost increases down.”

But then, health care spending was down across the U.S., not just in Massachusetts, last year.

“There’s not strong evidence that it’s different in Massachusetts; we really seem to be in line with those national trends,” Boros adds. “People are either going to doctors and hospitals a little less frequently, or they’re going to lower-cost settings a little more frequently.”

The result: Health insurance premiums were flat overall in 2013.

2013 average premiums:

Individual: $461 PMPM (1.8% increase 2012-2013)

Small group (1-50 enrollees): $421 PMPM (0.4% increase)

Mid-size group (51-100 enrollees): $444 PMPM (0.5% increase)

Large group (101-499 enrollees): $433 PMPM (-0.2% decrease)

Jumbo group (500+ enrollees): $423 PMPM (-0.8% decrease)

“2013 was a year in which we were able to exhale,” says Jon Hurst, president of the Retailers Association of Massachusetts. But he’s worried the break on rates was short-lived. This year, Hurst’s members are reporting premium increases that average 12 percent.

“If we’re going back to these double-digit increases that so many small businesses suffered through for most of the last decade, we have very large concerns,” Hurst says. “What’s going to happen to the small business marketplace in Massachusetts?”

Premiums are up for many individuals and small businesses this year, and expected to rise next year, because of new requirements under the Affordable Care Act — because patient demand for care is picking up again and because of a few new, expensive drugs.

Rick Lord, president of Associated Industries of Massachusetts, says his members continue to rate health care costs as their top concern.

“That’s not a big surprise,” Lord says, “because even though we came off a year where increases were pretty modest, we also know that health care costs on a per-capita basis are the highest in the country, so that puts [employers in Massachusetts] at a competitive disadvantage.”

Massachusetts residents spent $50.5 billion on health care last year, or $7,550 per person. That does not include a lot of dental, vision, over-the-counter medicines and other care not covered by health insurance, or all the money invested here in medical research and public health.

All in all, “we have to be impressed with the numbers,” says Stuart Altman, who chairs the Health Policy Commission, the group created to monitor health care spending.

“What is of concern though is that Blue Cross [Blue Shield], which is our largest insurer, seems to be significantly higher in terms of the rate of growth than the others,” says Altman.

Blue Cross Blue Shield of Massachusetts said in a statement that while it had not seen the report, the numbers are not an accurate reflection of the year-over-year increase in health care spending. Blue Cross said that its own calculation, using numbers that are not adjusted for patient health status, shows a 2.1 percent increase. CHIA used data that is adjusted for health status.

Among providers, Altman and Boros point out the state’s largest group of physicians, those tied to Partners HealthCare hospitals, were among the highest paid and had the greatest increase in spending last year.

“We’re going to be looking at that to see to what extent it could be justified or whether it reflects the fact that they are continuing to use their market power to get higher rates,” Altman says.

“Partners experienced great success in 2012, actually lowering the cost of care for our patients by nearly a percent[age point],” says Partners spokesman Rich Copp. “In 2013, trend did grow faster than expected and we know that there is more work to do in the coming years. But over the long term, our approach to the delivery of health care services, delivering more coordinated care in community settings, will make care more affordable for patients.”

Partners, Blue Cross and any other parties who want to contest the findings in this report will have a chance at a briefing today, where Boros is expected to highlight a few other findings:

• Public spending comprised 60% of Total Health Care Expenditures (THCE). This is money that flows through Medicare, Medicaid and the Veterans Administration.

• Commercial member enrollment with primary care providers paid under alternative payment methodologies (such a global budgets) decreased slightly to 34.3% in 2013.

• There was slow but steady growth in enrollment in self-insured plans from 2012 to 2013, contributing to a decrease in HMO enrollment.

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