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Massachusetts Health Spending 36 Percent Above National Average

Posted by Kristen Lepore on Dec 18, 2013 2:24:00 PM

The percentage of the Massachusetts economy spent on health care dipped slightly from 2009 to 2012, but Bay State business and residents still shelled out 36 percent more than the national average on doctors, hospitals and prescriptions, according to a preliminary Cost Trends Report published today by the Massachusetts Health Policy Commission (HPC).

Health care costsThe report found that health care spending as a percentage of the Massachusetts economy edged down from 16.8 percent in 2009 to 16.6 percent in 2012, following a similar trend for the nation as a whole.  The document also confirmed what many employers already know – Massachusetts has the highest per capita health-care expenditures in the country at $9,278 versus $6,850 for the United States.

The gap reflects price growth in commercial insurance products and the fact that Bay State residents continue to use hospitals, long-term care facilities and other services at a much higher rate than residents of other states.

The commission notes that the high price of health care crowds out other priorities for consumers, businesses and government.

The Health Policy Commission was created by the 2012 Massachusetts health cost control law to limit increases in health spending to no more than the overall rate of economic growth in the commonwealth. That growth rate is expected to be 3.6 percent this year.

“The report provides both a clear picture of the factors that drive increases in medical spending and a roadmap for ensuring that Massachusetts maintains a world-class health care system that is affordable for everyone,” said Richard C. Lord, President and Chief Executive Officer of AIM and a member of the 11-person HPC.

“Failure to control costs will impede the ability of Massachusetts employers to compete and create jobs in a global economy.”

The rising cost of providing health care to workers represents a persistent concern for Massachusetts employers. It is a concern that has deepened for small employers during the past several months as provisions of federal health care reform threaten to increase premiums by up to 57 percent for companies with fewer than 50 workers.

Spending on hospitals and long-term care facilities accounts for much of the $2,463 annual difference in what Massachusetts consumers pay and what people in other states pay for care, according to the HPC report. Massachusetts residents pay $1,030 per year more than the national average on hospitals, $771 per year more on long-term care and home health, and $580 more on professional services.

Residents here also make uniquely heavy use of hospitals. The HPC report shows that inpatient admissions to hospitals in Massachusetts run 10 percent higher than the national average, while Bay Staters use hospitals for outpatient services 72 percent more frequently than Americans as a whole. Sixty-eight percent of all hospital discharges in Massachusetts take place from major teaching hospitals.

The report warns that while medical spending in Massachusetts slowed in tandem with national averages in 2009-2012, the commonwealth faces a challenge to keep growth rates low.

“Past periods of slow health care growth in Massachusetts, such as the 1990s, have been followed by sustained periods of higher growth,” the document said.

Topics: Health Care Reform, Health Care Costs, Massachusetts employers, Health Insurance

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