Massachusetts Reports Show Cause, Effects of Health Care Cost Crisis

Posted by Christopher Geehern on May 27, 2011 10:44:00 AM

State officials published two reports yesterday that provide a sobering look at both the rise in health insurance premiums facing employers and the price disparity among hospitals and doctors that underlies at least part of the crisis.

Health cost controlThe twin reports by the Massachusetts Division of Health Care Policy underscore AIM’s determination to secure meaningful health reform that will reduce premiums for employers and citizens.

The first report, Premium Levels and Trends in Private Health Plans: 2007-2009, shows that private group health insurance premiums in Massachusetts increased roughly 5 to 10 percent annually over the two year period when adjusted for benefits. The Consumer Price Index increased by only 1.7 percent nationally and 2.0 in the Northeast region over the same period, signaling that the rate of increase in the cost of health care far outpaces the rate of inflation.

The report also shows that the level of benefits covered by private group health insurance is declining and member cost-sharing is increasing. Deductibles and copayments generally increased from 2007 to 2009. Among small groups, average benefits decreased 3.6 percent from 2007 to 2008 and 6.6 percent from 2008 to 2009.

A separate report, Price Variation in Massachusetts Health Care Services, showed wide variation among doctors and hospitals in the price for common medical procedures. There was at least a three-fold difference for every service and, for most, a variation of six- or seven-fold.

The report concludes that for inpatient stays such as cesarean deliveries, the highest-paid hospitals receive payments that are typically more than double the lowest-paid hospitals.  While there was significant price variation among providers, the study found very little variation in the quality of care and the outcomes.

“The reports confirm the degree to which rising health insurance costs are sapping energy from the Massachusetts economy,” said Richard C. Lord, President and Chief Executive Officer of AIM.

“At the same time, we are optimistic that we stand at a singular moment that will see employers, doctors, insurers and policymakers working together to resolve the crisis.”

Governor Deval Patrick, who has filed a cost-control bill that would change the manner in which employers and consumers pay for medical care, said the reports must serve as “an alarm bell sounding the need for urgent action to control rising health care costs in the Commonwealth.

A staggering 97 percent of AIM-member employers identified the cost of health insurance as a major concern in a survey last fall.

Topics: Associated Industries of Massachusetts, Health Care Costs

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