Insurance premiums rose on average 6.6% between 2020 and 2021, raising costs for families and businesses and highlighting the stubborn challenge of rising health costs.
A new report from the state's Center for Health Information and Analysis found that between 2020 and 2021, total health care spending in Massachusetts grew by 9% to $67.9 billion, or $9,715 per resident. That reflects an unprecedented drop in health care spending in 2020 due to the COVID-19 lockdown, with utilization bouncing back in 2021 with patients who were sicker after deferring care. But even at an annualized rate, health care costs rose on average 3.2% a year since 2019 -- higher than the state's 3.1% target.
Insurance premiums rose on average 6.6% between 2020 and 2021, according to CHIA, with the average commercially insured consumer paying $563 a month. More people are enrolling in high deductible health plans, which means they pay lower premiums but have higher out-of-pocket costs before their insurance kicks in for most medical expenses.
Lawmakers should return to the health care cost debate given the post-pandemic "new normal." Here are some areas to examine:
Pharmacy spending: While most health care costs fluctuated during the pandemic, pharmacy spending continued a steady rise. Between 2019 and 2021, pharmacy spending in Massachusetts grew by 7.5% annually, according to CHIA, even after accounting for the rebates drug manufacturers pay insurers. This number, which excludes the cost of COVID vaccines purchased by the federal government, appears consistent with national trends. Data compiled by Health Policy Commission senior director of research and cost trends David Auerbach found that average commercial insurance spending on branded prescription drugs increased from $684 per prescription in 2017 to $1,029 in 2021.
Telehealth: When the pandemic hit, telehealth went from a negligible part of the health care system to its lifeblood, comprising $1.8 billion in spending in Massachusetts in 2020 and $1.7 billion in 2021. As pay parity requirements expire, policy makers should examine the potential for savings. One question is whether savings will come through lower reimbursement rates or through other avenues -- having fewer in-office visits, more efficient care, and potentially having more lower-acuity care performed by physician assistants or nurses.
Workforce: With pandemic-related burnout, early retirements, and the lure of more flexible jobs elsewhere, health care is experiencing a workforce crisis. A recent Massachusetts Health and Hospital Association survey found that in fiscal 2022, hospitals spent $1.52 billion on temporary staff, mostly traveling nurses, up from $204 million in 2019. Short-term, lawmakers may want to look at whether additional regulations are needed to govern the health care gig economy. Long-term, the state must shore up the workforce, whether through increasing capacity for education and training, exploring licensing reforms, developing student loan repayment programs, or ensuring hospitals have resources to provide wages, benefits, and working conditions that will retain staff.
Provider price variation: Lawmakers have been trying unsuccessfully for years to address unwarranted price variation, where different hospitals get paid different amounts of money by insurers for identical services or drugs based on factors like their size and marketing power. The Health Policy Commission has recommended capping prices for the highest-paid providers, while lawmakers have considered other ways of limiting price variation or using fees to shift money between hospitals. This also raises the issue of how to get patients to obtain care in less expensive settings -- for example, moving routine care from a hospital to a physician's office.
Out-of-hospital care: Hospitals are experimenting with innovative ways to keep people home. Mass General Brigham and UMass Memorial Medical Center started "hospital-at-home" programs using monitoring technology and home visits to deliver acute care. Beth Israel Lahey Health offers remote health monitoring, where nurses monitor patients' daily health data. Expanding successful initiatives will cut costs while delivering care in a more comfortable setting.
Data: Massachusetts collects a ton of health care data. But is it the right data? Lawmakers at a Health Policy Commission hearing Wednesday questioned whether the state needs to create an "affordability benchmark," setting a target for how much consumer health care cost should rise per year; to collect data about health care being delivered through companies like Amazon and Best Buy; or to learn about the impact of private equity companies entering health care.
As state Representative John Lawn, House chair of the Committee on Health Care Financing, said at the hearing, it is not sustainable to have health care costs growing at a rate that outpaces the rest of the economy. Slowing cost hikes won't be easy, but Healey and the Legislature need to put this ballooning industry on a diet.
-- Boston Globe, March 20