State Tightens Standard for Health Cost Growth

Posted by Katie Holahan on Mar 29, 2017 1:21:55 PM

The Massachusetts Health Policy Commission voted unanimously today to lower the state’s objective for the growth of health-care expenditures from 3.6 percent to 3.1 percent beginning in 2018.

HPC.jpgThe vote marks a significant milestone for employers and consumers struggling with the soaring cost of health insurance. AIM President and Chief Executive Officer Richard C. Lord, who represents employers on the Health Policy Commission, has been a vocal supporter of lowering the benchmark and voted in favor of the 3.1 percent level.

“Today’s vote represents a concrete, measurable step toward moderating the type of premium increases that give employers a knot in their stomachs when they look at their insurance renewals,” Lord said.

“The action will ultimately mean more than all the sound and fury over national health reform in Washington."

The spending growth benchmark, established as part of the health-cost control law of 2012, is a critical component for understanding year-over-year increases in health-care spending. AIM has always favored an aggressive goal – the organization joined with the Greater Boston Interfaith Organization in 2012 to support setting the health-care cost growth benchmark at two percentage points below the growth in the state’s economy.

The association ultimately supported the establishment of a 3.6 percent benchmark because it recognized the vital importance of creating a standard to measure cost-containment efforts.

But Massachusetts has not yet seen sufficient progress. The commonwealth has exceeded the 3.6 percent benchmark in two of the past three measurement periods. Total Health Care Expenditures (THCE) grew by 4.2 percent from 2013 to 2014, and by 4.1 percent from 2014 to 2015.

“These 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,” Lord said.

AIM is also addressing the health cost issue by supporting new research conducted by the Health Policy Commission suggesting that Massachusetts could reduce total health-care expenditures anywhere from $279 million per year to $794 million per year, or 0.5 to 1.3 percent, by making seven improvements to the health-care system.

The improvements:

  • Shift community appropriate care to community hospitals – Reduce by 5-10 percent the number of cases treated at teaching hospitals that would be more appropriately treated at community hospitals. Savings: $43 million to $86 million.
  • Reduce hospital readmissions – Cut the 2015 hospital readmission rate from 15.8 percent (78,000 readmissions) to a range of 15 to 13 percent. Savings: $61 million to $245 million.
  • Reduce avoidable emergency room visits – More than 900,000 emergency room visits during 2015 were considered avoidable. Shift 5-10 percent of those avoidable visits to lower-cost settings. Savings: $12 million to $24 million.
  • Reduce use of institutional post-acute care – Redirect 5-21 percent of the patients who currently leave hospitals to go to institutional rehabilitation facilities into home care. Savings: $46.6 million to $186 million.
  • Provide incentives for consumers to choose high-value primary care providers.
  • Increase the use of alternative payment methods -The commonwealth wants to increase the percentage of HMO participants covered by alternative payment methods from 58.5 percent in 2015 to 80 percent this year. Savings: $23 million to $68 million.
  • Reduce the growth of prescription-drug spending – Cut the growth-rate of spending on prescriptions from 5.0 percent in 2016 to 3.6 percent to 4.3 percent. Savings: $57 million to $113 million.

Topics: Health Care Costs, Health Insurance, Health Care

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.





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.


  • 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

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