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AIM Urges State to Maintain Aggressive Health-Cost Benchmark

Posted by Katie Holahan on Mar 28, 2018 1:30:00 PM

Massachusetts should retain its 3.1 percent health-care cost growth benchmark because employers continue to struggle to provide quality health insurance coverage to their workers, AIM told a state panel today.

health_care.jpgThe state’s largest employer association told the Massachusetts Health Policy Commission that the current benchmark is necessary to moderate health-care costs that remain well above national averages. The Massachusetts Legislature established the health-cost benchmark as part of a 2012 health-care reform law.

The benchmark was 3.6 percent from 2012 until 2017, when it was lowered to 3.1 percent. AIM is recommending that the Commission retain the 3.1 percent mark for 2019.

“As we continue to track trends in health-care cost and utilization, the cost-growth benchmark has become a critical component for understanding year-over-year changes in health-care spending,” said Richard C. Lord, President and Chief Executive Officer of AIM.

“More than 10 years after the implementation of Massachusetts’ universal health care law, employers, consumers and the public sector continue to struggle with escalating costs of comprehensive health care.”

Massachusetts doctors and hospitals have a mixed record of meeting the heath-cost benchmark. Total Health Care Expenditures (THCE) grew by 2.3 percent from 2012 to 2013; 4.2 percent from 2013 to 2014; by 4.1 percent from 2014 to 2015; and by 2.8 percent from 2015 to 2016.

Lord told the Health Policy Commission that consumer behavior plays a large role in accelerating health-care costs, especially the tendency of patients to use of high-cost settings to receive care. According to estimates provided by the Commission, reducing just some of these factors by 10 percent could save tens of millions of dollars in unnecessary health-care spending.

The hospital outpatient utilization rate in Massachusetts is 50 percent higher than the national average. The rate of emergency room visits and inpatient discharges are 10 percent and 8 percent higher than the national average, respectively. And post-acute care discharges in the Bay State are 27 percent higher than the national average.

“And as premium and utilization costs continue to grow, employers have fewer options and less flexibility to keep year-over-year increases in check, raising important concerns about their ability to offer comprehensive insurance to their employees. Without comprehensive insurance, employees have less ready access to the type of coordinated and preventative care that leads to long-term health and productivity,” Lord testified. 

“As an advocate for employers in the commonwealth, we believe that the appropriate role of government in controlling health insurance costs should be to establish reasonable health care spending targets, like the 3.1 percent benchmark, instead of proscribing regulatory solutions. The market should be given the chance to correct itself, and the commonwealth’s function should continue to be the monitoring of the industry’s progress in achieving this goal.”

The unsustainable cost increases are occurring in an industry where experts agree that at least a third of all care is unnecessary – delivered in the wrong setting; marked by a lack of coordination; provided with an inadequate emphasis on prevention; harmed by medical errors; burdened with rules and fraud; or just plain excessive.

Topics: Controlling Health Care Costs, Health Care

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