Decoding Blame Game at Health Care Cost Growth Hearing
TL/DR –
The annual healthcare cost growth hearing in Massachusetts focused on the increasing costs of healthcare, with different stakeholders having various opinions on the causes. Healthcare spending in the state is projected to be $71.7 billion in 2022, a 5.8% increase per capita from 2021, which surpasses the state’s Health Policy Commission’s reasonable growth benchmark of 3.1%. Key issues discussed during the hearing included rising pharmaceutical prices, increased reliance on hospitals due to a shrinking primary care sector, rising insurance premiums and out-of-pocket costs, growth in health plans’ net worth and overhead costs, and the financial struggles of hospitals amid a workforce shortage.
Increased Health Care Costs in Massachusetts Trigger Finger-Pointing at Annual Hearing
Escalating health care costs, extended hospital stays, inflated pharmaceutical prices, and growing insurance overheads were the contentious topics discussed at this year’s annual health care cost growth hearing in Massachusetts. Stakeholders like hospitals, insurers, patients, and businesses each offered different perspectives on how to reduce these mounting costs.
According to a report by the Center for Health Information and Analysis, health care spending in Massachusetts is projected to reach $71.7 billion in 2022. This represents a per capita health care expenditure of $10,264 per resident, a 5.8 percent increase over the previous year and well above the state’s Health Policy Commission’s recommended growth rate of 3.1 percent.
Insurers, hospitals, care providers, businesses burdened with high-cost insurance plans, and health equity advocates all agreed at the hearing that health care costs are excessive. However, opinions varied about the root cause of these escalating prices.
Health Care for All’s Alex Sheff suggested that the state refocus resources and modify payment structures for primary care and behavioral health. Doing so could help alleviate pressure in emergency departments and hospitals by enhancing access to primary healthcare.
Health Policy Commission Director David Seltz highlighted the increasing reliance on hospitals for care needs, a trend amplified by the pandemic, leading to an increase in long hospital stays. As a result, a shortage of medical workers, particularly nurses, and outpatient care delays are compounding the problem.
In 2022, almost half of Bay Staters (42.4 percent) with private insurance had high deductible plans, and 31.2 percent reported unmet health care needs in their family due to high costs.
Elizabeth Leahy from the Massachusetts Association of Health Plans explained the increase in insurance overheads as a result of inflation, salary demands, and IT infrastructure investments. She also called for lawmakers to control the costs of high-cost hospitals.
Meanwhile, the Massachusetts Health and Hospital Association’s Steve Walsh argued that hospitals are still recovering from the impacts of the COVID-19 pandemic and are struggling with a significant workforce shortage.
At the hearing, small business groups contended that they and their employees are bearing the brunt of the rising costs. Jon Hurst of the Retailers Association of Massachusetts requested a reduction in the benchmark growth rate to 3.1 percent from 3.6 percent to help alleviate this burden.
Prescription drug spending has made one of the most significant leaps in health care spending, growing 10 times faster from 2019 to 2022 compared to the growth rate from 2017 to 2019. The Health Policy Commission recommended more oversight on pharmaceutical spending, which has become a significant expense for families.
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