Attorney General Cites Dysfunctional Health-Care Market

Posted by Katie Holahan on Sep 21, 2015 9:25:00 AM

A continued migration of patients to high-priced doctors and hospitals means that Massachusetts is unlikely to meet its benchmark for health-care cost increases in 2015, according to a new report by Attorney General Maura Healey.

AG.Maura.HealeyThe report finds that widely disparate prices paid to medical providers – differences unexplained by provider quality – have created a market in which patients continue to utilize higher cost providers, driving up health care costs.  The effects of the market dysfunction, coupled with anticipated growth in pharmacy costs and utilization of health care services, raise serious concerns about the commonwealth's ability to meet the 3.6 percent benchmark for increases in health costs.

“Not enough has changed and it certainly has not changed fast enough,” Healey said Friday during a meeting with the Associated Industries of Massachusetts Board of Directors.

“We need to do more. We have to act now.”

The report finds that the most highly-paid doctors and hospitals continue to grow market share, further increasing costs. And global payments, while having positive effects, have tended to lock in historic payment differentials, thus sustaining disparities in the resources available to different providers to carry out their mission.

The report recommends encouraging innovation in the health-care industry and strengthening and expanding consumer incentives - initiatives that will necessarily involve employers.

The report points to the importance of simplifying the cost and quality information provided to employers when they are choosing coverage, especially across providers. Clear information should also be provided to employees during enrollment and when they are choosing their primary care group.

On the "supply side" – doctors, hospitals and insurers -  the attorney general’s report suggests implementing incentives and penalties evenly by giving efficient providers more room to grow (under the benchmark) than less efficient providers. The report also points to different ways of monitoring and understanding disparities in health care resources, whether that be directly regulating variation in provider prices or tracking income/health adjusted status by zip code.

“This latest in a series of reports on health-care by the Massachusetts attorney general raises concerns about rising costs for employers who provide health insurance to workers,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts and a member of the Massachusetts Health Policy Commission.

“The data and graphs in the report have real consequences for real employers and real workers. The cost of health insurance remains a central issue for the Massachusetts economy.”

The report found that enrollment in tiered insurance products has increased, but the presence of these products has not resulted in an overall shift in patient volume away from higher priced providers. Current approaches appear hampered by inconsistent incentives for consumers to obtain care at higher value providers.

The Health Policy Commission will conduct its annual hearing on health-care costs in Massachusetts October 5 and 6.


Topics: Health Care Costs, Health Insurance, Attorney General Maura Healey

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