Prices, Costs to Consumers Heading “In The Wrong Direction,” Seltz Says
SEPTEMBER 13, 2023: Health care spending in Massachusetts is “moving in the wrong direction” 11 years after enactment of a landmark cost-containment law, and regulators will make another pass at convincing lawmakers to support a new approach, a top state official said Wednesday.
The Health Policy Commission published the latest in a series of annual health care cost trends reports, showcasing a wide range of data points that reveal significant strain on patients and employers.
Nearly three-quarters of small business health insurance plans had deductibles of more than $2,800 for families or $1,400 for individuals in 2021, the HPC found. In 2012, the average annual family premium was $16,400, and by 2021, that had jumped by more than a third to $23,100. And health care costs are “consistently increasing faster than wages,” the agency wrote.
In the wake of the COVID-19 pandemic, the pace of health care spending growth is faster in Massachusetts than it is for the country as a whole, according to the HPC. Total health care expenditures per capita increased at an annualized rate of 3.2 percent from 2019 to 2021, a notch above the 3.1 percent benchmark that reflects the state’s goal for cost containment.
“Unfortunately, what we see from a lot of the data in our report is that this cycle is moving in the wrong direction,” HPC Executive Director David Seltz said at an agency board meeting Wednesday. “We see that prices continue to grow, and this is contributing to higher premiums and higher out of pocket costs both for employers and for consumers.”
More and more Bay Staters are enrolled in high-deductible health plans, Seltz said. He added that research shows residents who have those plans are more likely “not to get the care that they need due to the fear of cost of care.”
The HPC, which was created by the same landmark 2012 law that established the cost growth benchmark system, outlined nine recommendations in its latest report that board members said could both rein in the trend and reshape the approach regulators take.
Many of the recommendations in the HPC’s latest health care cost trends report mirror previous suggestions the independent agency has made, like subjecting pharmaceutical companies to greater regulatory scrutiny, without securing buy-in from legislative leaders to push changes across the finish line.
The most updated entry takes aim at the benchmark process itself. In addition to setting a topline figure each year that represents a goal for keeping spending increases within a certain range, the HPC called for producing new affordability and equity targets.
“These aggregate figures about overall spending growth in the system, cost growth in the system, are relatively meaningless to individuals, families, even advocates as they’re trying to interpret and understand this information,” said HPC Board member Dr. Alecia McGregor, adding that new measurements would make the data “more interpretable.”
The HPC also wants lawmakers to strengthen enforcement tools for keeping spending in line. Regulators want to expand the performance improvement plan process that orders financial changes at health care entities deemed responsible for excessive spending growth.
In its decade-long history, the HPC has only subjected a single entity — Mass General Brigham in 2022 — to a full performance improvement plan involving mandatory spending cuts.
Other recommendations include requiring “greater accountability of health plans” for passing savings along to patients, automating prior authorization where feasible, and investing in the stretched-thin health care workforce.
Commission officials did not outline specific steps for implementing each of their recommendations. Some ideas will require legislative approval, which in recent years has been difficult to attain, while Seltz said others can be implemented by the HPC itself.
“These policy recommendations really do become a launching pad for our work and engagement for the next year,” Seltz said.
While they have agreed on some reforms to mental health and reproductive care access, House and Senate Democrats in recent years have struggled to align their visions for health care market reforms.
House Speaker Ron Mariano has been pushing to update the “determination of need” process that subjects larger providers to scrutiny when they expand into smaller markets covered by financially vulnerable hospitals, while Senate President Karen Spilka has sought legislation to overhaul prescription drug pricing.
HPC board member David Cutler said during Wednesday’s meeting that the agency’s suggestions have had “mixed success” in the past, and he asked Seltz what officials can do to secure a favorable reception.
Seltz replied that he believes the Legislature has made “tremendous progress” in recent years and referenced “comprehensive proposals,” several of which did not make it across the lawmaking finish line.
“I’ve heard both Speaker Mariano and Senate President Spilka talk about the priority of health care reform this legislative session,” Seltz said.
Steve Walsh, president and CEO of the Massachusetts Health and Hospital Association, said his group is “especially eager” to work with the HPC on recommendations aimed at strengthening the state’s health care workforce.
“Between 19,000 job openings, 1,200 patients needlessly stuck in hospitals, and unrelenting financial losses, healthcare leaders have been sounding the alarm on a crisis that — if gone unresolved — will prevent us from achieving meaningful cost goals,” Walsh said in a statement. “It remains an unfortunate reality that the caregivers who led our nation-leading COVID response are the last to recover from those efforts.”
The Massachusetts Association of Health Plans praised the report for highlighting “high and ever-increasing provider and pharmaceutical prices along with routine care being delivered in high-cost settings” as cost drivers.
“Over 30 state reports and countless national studies have pointed to provider prices and run-away pharmaceutical costs as the key drivers of rising health care premiums. Without concrete action to constrain these costs, health plans will be unable to meet any proposed affordability target or the cost growth benchmark,” MAHP President and CEO Lora Pellegrini said in a statement. “As premiums reflect the cost of care, it is imperative that the Legislature take action to address the primary drivers of health care spending to make health care more affordable for employers and consumers in Massachusetts. MAHP’s member health plans have and will continue to do all we can to contain costs and make health care more affordable for citizens of the Commonwealth.”