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Infographic: The Rising Cost of Health Care

Posted by Katie Holahan on Dec 17, 2015 1:27:03 PM

The Massachusetts Health Policy Commission this week released its 2015 Cost Trends Report examining the cost of health care and health insurance in the commonwealth. Per-person spending on health care grew at less than the 3.6 percent overall economic growth rate, though overall spending grew at 4.8 percent. The bottom line is that health care spending continues to divert precious resources from employers, families and state government.

Graphics are courtesy of the Health Policy Commission.

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Topics: Health Care Costs, Health Care, Benefits

Why is Health Care So Expensive in Massachusetts?

Posted by Christopher Geehern on Oct 28, 2015 1:50:15 PM

Editor's note - The cost of health care in Massachusetts is everyone’s problem. On average, every Massachusetts resident spends 36 percent more on health care than the national average. This comes primarily as a result of lack of effective competition in the health care marketplace and the inability of our largest providers to treat patients in the appropriate care setting.

Howard Grant, JD, MD, President and Chief Executive Officer of Lahey Health, recently gave an engaging and provocative talk on what employers, consumers and health care providers can do together to fix this growing problem.

Topics: Health Care Costs, Health Care

Governor Will Let Stand Repeal of Fair-Share Assessment on Employers

Posted by Kristen Lepore on Jul 11, 2013 2:48:00 PM

Governor Deval Patrick said today that he will let stand a budget provision repealing the Fair Share health care assessment on employers, even though the Obama Administration last week postponed a related provision of federal health reform.

Deval PatrickAssociated Industries of Massachusetts applauds the governor’s decision. Elimination of the Fair Share assessment created under the 2006 state health care reform law is part of package of changes intended to make way for the federal Affordable Care Act and reduce the administrative burden on employers who provide health insurance.

John Regan, Executive Vice President of Government Affairs at AIM, said the new implementation date for federal penalties does not diminish the value to employers and consumers of eliminating Fair Share and the Medical Security Trust Fund.

“The temporary presence or absence of health reform penalties does not drive benefit decisions for the vast majority of Massachusetts employers,” Regan said.

Included in the budget for Fiscal Year 2014 now on the governor’s desk is a provision eliminating the $295 per employee Fair Share assessment that Massachusetts employers have been paying under state health reform since 2006. The budget would also drop the requirement that employers collect and retain the Health Insurance Responsibility Disclosure (HIRD) form, and replace the current $67.20 per employee contribution to the Medical Security Trust Fund with a $50 per employee contribution to fund subsidized health care.

The measures were the product of extensive negotiations among AIM, state lawmakers and groups representing the health care industry and consumers.

The proposed changes became more complicated last week when the U.S. Department of the Treasury announced that it will postpone until 2015 the federal health reform mandate that larger employers provide health insurance for their workers or face penalties. Those penalties - $2,000 per each full-time employee after the first 30 for companies that do not provide insurance or $3,000 per full-time employee for employers who offer health insurance that is either not affordable or of minimum value– were expected to replace the Fair Share assessment.

Elimination of the Fair Share assessment has been a priority for the AIM Health Policy Committee and was proposed by Governor Patrick in January.

Topics: Health Care Reform, Issues, Health Care

Employers Embrace New Health Plans to Reduce Costs

Posted by Eileen McAnneny on Feb 10, 2011 2:54:00 PM

Massachusetts employers are migrating to new health insurance plans that limit premium increases by encouraging customers to seek quality care at reasonable rates, The Boston Globe and WBUR report today.

Health costsAIM applauds the trend. The association has for months urged employers to use tiered networks to control the spiraling cost of health insurance. AIM will make the case this spring to members that these products provide value and make both employees and providers aware of the cost of care.

The Globe article reports that hundreds of small businesses have signed up for a new tiered product offered by Blue Cross Blue Shield of Massachusetts, making it the fastest product launch in the insurer’s history. Tufts Health Plan and Harvard Pilgrim Health Plan also report significant interest in their new tiered offerings.

The trend will likely accelerate in the spring when the health cost control law signed by Governor Deval Patrick in August takes effect. The law requires Massachusetts health plans to offer at least one limited or tiered network product that is at least 12 percent less expensive than a comparable full-network offering. 

The idea behind limited networks is simple – find quality medical care at reasonable prices. That means avoiding high-cost providers for procedures that can be performed just as well in lower-cost, community settings.

In a tiered network plan, the patient’s ability to choose where to have care provided is preserved, however, he or she may have to pay more to receive care at more expensive medical facilities. In a limited network product, access to those high cost facilities is prohibited altogether.

“These innovative products that differentiate between providers give employers the opportunity to control health care expenses that have in some cases been rising as much as 20 percent to 40 percent per year,” said Richard C. Lord, President and Chief Executive Officer of AIM.

Limited and tiered networks begin to address one of the leading cost drivers in Massachusetts – the gaping disparity in rates among doctors and hospitals within commonwealth for the same service and same quality outcome. A recent report by the Massachusetts Attorney General concluded that the primary driver of health costs is the variation in rates that certain hospitals and physician groups are able to charge relative to their peers.

The growing popularity of tiered-network plans is one of several recent developments that together show considerable momentum building for controlling health care costs in Massachusetts.

Consider:

  • The chief executive of Blue Cross Blue Shield of Massachusetts is urging hospitals to adopt a new global payment system and warned that providers who hold onto traditional fee-for-service arrangements face level or reduced payments.
  • The Patrick administration is preparing to file health cost legislation that is widely expected to institute a payment system under which medical care providers are put on an annual budget and given incentives to control costs and improve care instead of being paid for individual doctor visits and procedures.
  • The governor and the business community appear to be on the same page when it comes to helping struggling cities and towns reduce their cost of providing health insurance. The administration filed a bill last week that would require all cities and towns to either join the state-run Group Insurance Commission or institute a program “of equivalent value and cost.”

Topics: Associated Industries of Massachusetts, AIM, Health Care Costs, Health Insurance, Health Care

Massachusetts Blue Cross CEO Adds Momentum to Health-Cost Control

Posted by Eileen McAnneny on Jan 24, 2011 3:59:00 PM

The push to control health costs in Massachusetts gained significant momentum over the weekend as the chief executive of Blue Cross Blue Shield of Massachusetts urged hospitals to adopt a new global payment system and warned that providers who hold onto traditional fee-for-service arrangements face level or reduced payments.

Health cost controlBlue Cross President and CEO Andrew Dreyfus, in a letter to hospitals and physician practices reported Sunday in The Boston Globe, noted that “we all know that rising costs continue to threaten the health care that is so important to our community.

“Health care costs are making businesses in Massachusetts less competitive, and limiting their ability to grow. Health care costs are squeezing municipal budgets, taking money from schools and police and fire protection, and health care costs are consuming too much of family incomes, forcing many families to make difficult sacrifices,” Dreyfus wrote.

Dreyfus’ comments came as the Patrick administration prepares to file health cost legislation that is widely expected to institute a payment system under which medical care providers are put on an annual budget and given incentives to control costs and improve care instead of being paid for individual doctor visits and procedures.

Associated Industries of Massachusetts, which has been at the forefront of efforts to resolve the insurance crisis facing employers, applauds Dreyfus’ comments as a constructive step in helping employers suffering with rate increases of up to 40 percent. Employers remain ready to work with lawmakers, doctors, hospitals and insurers to ensure that spiraling health costs do not divert an already tentative economic recovery.

We encourage members to read the full article and to leave your comments below.

Topics: Employers, Associated Industries of Massachusetts, AIM, Health Care Costs, Health Care

Massachusetts Representatives Back Move to Repeal 1099 Provision

Posted by Brian Gilmore on Jan 18, 2011 2:42:00 PM

House Republicans have initiated efforts to repeal a controversial provision of federal health care reform that will require businesses to file 1099 tax forms for every vendor that sells them more than $600 worth of goods or services. The provision is due to take effect in 2013.

The Republican leadership has made the 1099 repeal a priority and has therefore assigned the initiative the number H.R. 4. The bill has more than 245 co-sponsors - nearly all House Republicans and several Democrats, including Massachusetts Representatives Barney Frank and Niki Tsongas.

The provision will subject more than 40 million entities, including governments, nonprofits, and businesses of all sizes across the nation to onerous data collection and IRS information filing burdens on virtually all non-credit card purchases. 

AIM believes the 1099 provision would saddle employers with significant administrative and accounting expenses at a time when many firms are still struggling with a soft economy. We appreciate Representatives Frank and Tsongas for supporting the measure, and will ask other members of the Massachusetts Congressional delegation to join them. 

Topics: Associated Industries of Massachusetts, Health Care Reform, AIM, Health Care, Taxes

Control of Health Costs Key to Economic Future of Massachusetts

Posted by Rick Lord on Jan 3, 2011 5:32:00 AM

Will Massachusetts find a way in the New Year to moderate the soaring cost of health insurance before it erodes the economic foundation of the commonwealth?

Common Wealth 2011That’s the question on the minds of thousands of Massachusetts employers as Governor Deval Patrick begins a second term and the Massachusetts Legislature prepares to convene its 2011-2012 session. Amid the many challenges that employers face – a sluggish economy, taxes, burdensome regulation – health care costs represent the seminal business issue of 2011 for companies struggling to provide decent insurance coverage to their workers.

Associated Industries of Massachusetts this morning published its third annual Common Wealth statement outlining the principles and beliefs that will drive our advocacy on behalf of Massachusetts employers during the next 12 months. Given that 97 percent of AIM members who responded to a survey last fall identified health care as their primary concern, it’s no surprise that Common Wealth 2011 – Critical Condition emphasizes the association’s ideas for resolving an issue that threatens to choke economic opportunity for employers and citizens alike.

Four years after the passage of the landmark Massachusetts Health Reform Act and several months after Governor Deval Patrick signed a health care cost control law, virtually everyone agrees that the Massachusetts health care market is unsustainable without fundamental changes to the way companies and consumers purchase medical insurance. No one knows that better than the Massachusetts employers trying to provide health insurance in the face of 20 percent, 30 percent and 40 percent annual premium increases. The health care system will collapse of its own weight if the companies that foot the bill for insurance are no longer able to pay.

Massachusetts has a unique opportunity and responsibility to solve the health cost puzzle. The commonwealth became a model for the nation in 2006 when it undertook a bipartisan health reform that has since extended coverage to 400,000 people who did not have coverage previously. With the rest of country only now taking its first, halting steps toward expansion of coverage, it’s time for Massachusetts to establish a model for making world-class health care measurable and affordable for employers and consumers alike.

The process is complex and will require involvement from everyone. Employers must become more knowledgeable insurance buyers. Consumers must develop the same acumen for comparing medical services that they use to purchase automobiles. Doctors and hospitals must look in the mirror and address the staggering price differentials among practitioners and institutions within Massachusetts. And health plans must minimize the share of premium dollars they spend on administration.

We hope you take the time to read Common Wealth 2011 – Critical Condition and we welcome your comments.

Let the debate begin.

Topics: Associated Industries of Massachusetts, Health Care Reform, AIM, Health Care Costs, Health Insurance, Health Care

Administration Affirms Intent to Reduce Health-Insurance Costs

Posted by Christopher Geehern on Nov 17, 2010 11:46:00 AM

The commissioner of Health Care Finance and Policy on Monday affirmed the Patrick Administration’s commitment to reducing, and not just moderating, the cost of health insurance for Massachusetts employers.

Morales.DavidThese welcome comments by Commissioner David Morales came less than a week after he was quoted by Statehouse News Service as saying that it may not be politically or economically realistic to reduce health premiums when health care represents a key sector of the Massachusetts economy. AIM believes that price reductions are possible with political will and effort.

Morales wrote on his blog Monday that the administration “is committed to providing businesses with the relief they need from skyrocketing premium increases and giving them the economic breathing room they need to create jobs.

“Some have expressed concerns that moving too far too fast will negatively impact Massachusetts businesses.  But, it is our assessment that cutting health care costs will give Massachusetts businesses the resources they need to grow and create jobs,” the commissioner wrote.

Morales noted that the cost of health care in Massachusetts has been rising at an “unsustainable” annual rate of 7.5 percent, far faster than the 4.0 percent increase in per-capita gross domestic product. He believes the key elements of controlling health costs are eliminating inefficiency and changing the way employers and consumers pay for health care.

“We need to be mindful of the impact of cost containment strategies, not to delay their implementation but rather to ensure that we achieve the desired outcomes.  These strategies must ultimately provide relief to businesses and consumers struggling with rising costs and promote high-quality, patient-centered care.  Change may not be easy, but it’s necessary,” he wrote.

AIM President and Chief Executive Officer Richard C. Lord applauded Morales’ comments and said that containing health care costs will be at the center of the association’s policy agenda for 2011. More than 97 percent of AIM members who took part in a recent issues survey identified health insurance premiums as a matter of “great” or “moderate” concern.

Topics: Associated Industries of Massachusetts, Health Care Reform, AIM, Health Care Costs, Health Care

Exchange Underscores AIM's Determination to Reduce Health Costs

Posted by Christopher Geehern on Nov 9, 2010 8:17:00 AM

An exchange yesterday between an executive of Associated Industries of Massachusetts and a senior Patrick administration official underscores two key elements of the effort to control rising health insurance costs:

  • AIM is committed to changes that will eventually reduce the cost of health insurance for employers.
  • There is significant political resistance to reducing the cost structure of a health care industry that is an important generator of jobs and innovation in Massachusetts.

The exchange between AIM Senior Vice President Eileen McAnneny and Commissioner of Health Care Finance and Policy David Morales took place at one of AIM’s seminars on the interaction of federal and state health care reform. As reported by State House News Service, Mr. Morales indicated that it’s “not realistic” to reduce the cost of health care. Ms. McAnneny responded that reductions are possible with “some political will and some effort.”

It’s interesting reading that crystallizes AIM’s determination to resolve an issue that threatens to undermine the long-term economic stability of the commonwealth.

Please let us know what you think. And join the conversation at one of the remaining AIM seminars on health reform.

Read the Article

Topics: Associated Industries of Massachusetts, Health Care Reform, AIM, Health Care Costs, Health Insurance, Health Care

Limited Networks Give Employers a Tool to Control Health Costs

Posted by Eileen McAnneny on Oct 26, 2010 2:13:00 PM

Employers seeking to control health-insurance premiums (and that’s just about all of them) have a new tool at their disposal as they negotiate plan renewals for 2011.

Limited networksThe health cost control law signed by Governor Deval Patrick in August requires Massachusetts health plans to offer at least one limited or tiered network product that is at least 12 percent less expensive than a comparable full-network offering.  That means employers and their workers can reduce costs and preserve benefits by doing business with community hospitals and other facilities that deliver verifiably cost-effective health care.

The requirement takes effect on January 1.

Health plans are still awaiting final regulations on limited network products from the Massachusetts Division of Insurance. But several carriers already have such plans on the market and others have them well along on the drawing board, so it’s a good time to begin the conversation with your health-plan representative.

“Limited networks give employers the opportunity to control health care expenses that have in some cases been rising as much as 20 percent to 40 percent per year,” said Richard C. Lord, President and Chief Executive Officer of AIM.

“These networks also allow both employers and their workers to find excellent medical care, not just expensive medical care.”

The limited network provision was part of a cost-control bill intended to provide relief to rate-shocked employers while policymakers, health care providers and business representatives hammer out long-term solutions to the problem. The law also limits the ability of subscribers to jump on and off health plans repeatedly; prohibits anti-competitive contracts between providers and insurers; and establishes a pilot program on bundled payments, creating building blocks on the way to payment reform. 

The idea behind limited networks is simple – find quality medical care at reasonable prices. That means avoiding high-cost providers for procedures that can be performed just as well in lower-cost, community settings.

Limited networks are particularly promising for Massachusetts because of the gaping rate disparity among doctors and hospitals within commonwealth.  The attorney general's office issued a report this year concluding that the primary driver of health costs is the variation in rates that certain hospitals and physician groups are able to charge relative to their peers.  The report states:

"Price variations are not correlated to (1) quality of care, (2) the sickness or complexity of the populations being served, (3) the extent to which a provider is responsible for a large portion of patients on Medicare or Medicaid, or (4) whether a provider is an academic teaching or medical facility. Moreover, (5) price variations are not adequately explained by differences in hospital costs of delivering similar services at similar facilities . . . Price variations are correlated to market leverage as measured by the relative market position of the hospital or provider group compared with other hospitals or provider groups within a geographic region or within a group of academic medical centers." 

Pat Hughes, President and CEO of Fallon Community Health Plan in Worcester, wrote recently in the Boston Business Journal that the key for employers is to find the right limited network. Hughes said employers should look for a few important ingredients:

  • A full spectrum of providers, including acute care hospitals, primary care physicians, specialists and other services;
  • Multispecialty group practices that use electronic medical records;
  • Community hospitals that have demonstrated through objective clinical data the capacity to deliver high-quality care and good outcomes at reasonable costs;
  • A mechanism that allows patients to visit a doctor or hospital outside the network for a second opinion or a procedure that is not available within the network.

Employers must become part of the solution to rising health care costs by taking proactive steps like purchasing a limited/tiered network product.  As the purchasers of health insurance, they hold huge potential to change the marketplace and need to start flexing a little muscle.

Topics: Employers, AIM, Health Care Costs, Health Care

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