Massachusetts regulators warn of out-of-control health care costs

Massachusetts regulators delivered one of their most forceful warnings yet that health care prices are spiraling out of control, ramping up the pressure on lawmakers who have been unable to wrangle the trend and fulfill a consensus vision of cost control.

Experts at the Health Policy Commission on Wednesday said the combination of total health care spending growth in Massachusetts and greater financial burden on patients exposes Bay Staters to harrowing choices about which of their basic needs to prioritize.

Between 2019 and 2021, per-capita commercial health care spending rose an average of 5% each year, more than a full point above the national growth rate and twice the rate by which incomes increased in that span, the HPC said Wednesday in a preview of its annual cost trends report.

The agency created more than a decade ago to contain health care cost growth took an even longer-term view to highlight the impact on families: between 2000 and 2021, the premium payments employees must make for their workplace-sponsored health insurance plans grew by 295%, more than three times as much as the 88% increase in household income and 60% general inflation.

“This trend of spending growth faster than income is unsustainable for governments, for employers, for residents, and we know that when premium growth grows faster than incomes, it erodes take-home pay, increases people’s avoidance of care, worsens health outcomes and requires people to choose between health care and other basic needs,” said David Auerbach, HPC senior director for research and cost trends. “Given that we know that we have to limit the growth of health care spending, and in light of the fact that we know that we want to increase spending in some other areas such as primary care, behavioral health care, and health equity in the workforce for under-resourced providers, we have to find areas where we can spend less quickly.”

The HPC previously said total per capita health care expenditures dropped 2.3% in 2020, which officials described as an outlier due to the pandemic, and then increased 9% in 2021. The 5% average annual growth for 2020 and 2021 figures presented Wednesday refer specifically to commercial spending per capita.

Auerbach said commercial health care spending in Massachusetts grew more slowly than it did in the country as a whole from 2013 until 2018 before the Bay State overtook the national rate in recent years.

Highlighting a few of the major findings that will feature in the full annual report due in September, Auerbach identified a pair of drivers behind the significant cost growth: higher-than-necessary spending, and more use of health care services than expected.

Commercial insurers often paid hospital-based providers far more than what Medicare would pay for certain services, the HPC found, swelling the total pot of expenses. As proof of that dynamic, the HPC said the volume of non-maternity inpatient stays dropped 16% between 2017 and 2021, but commercial spending on the lower amount of stays increased 12% in the same span.

Analysts counted more than $3 billion in commercial “excessive spending” in 2021 on seven categories: prescription drugs, labs, specialty…

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