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Massachusetts health care — wonky, with a healthy dose of reality

More Thoughts on the CHIA Report ("A blip, not a bloop")

More Thoughts on the CHIA Report ("A blip, not a bloop")

September 2, 2015

The headline leads today's Globe's front page: Health care costs jump, a setback for Mass. There's no question that today's report from CHIA, with its topline finding of a 4.8% per capita growth in total health care spending in 2014, might lead to the perception that our progress in controlling health care cost growth has hit a bump. Certainly 4.8% exceeds the state's goal of holding spending growth to 3.6% or less. But digging into the report, there's a complex mix of good and bad news, and the report defies simplistic conclusions. So here are a few of our takeaways:

Components of rate of increase leading to composite rate of 4.8%

Racial and ethnic disparities in reported patient experience

  1. MassHealth (Medicaid) spending growth drove the all of the excess spending. MassHealth spending grew by 19%, compared to much lower growth rates in other forms of coverage. Commercial insurance spending grew by only 2.9%, Medicare grew by 2.1%, other public coverage grew by 2.0%, and insurance overhead grew by 1.7%. Except for the MassHealth spending (more on that below), 2014 should be counted as another success story in the state's efforts to control health care spending.
  2. The MassHealth backstory is almost all due to (a) the breakdown last year in the state's implementation of the ACA, and (b) the expected shift into MassHealth of people formerly covered by the Connector. As the Connector's online eligibility system failed, state officials (appropriately) kept people in coverage by shifting people who applied into stopgap, unmanaged MassHealth coverage. Many of these people were formerly in the Connector's Commonwealth Care plan, which was being phased out. Meanwhile, CommCare enrollment (in member-months over the year) decreased by 55% for the whole year as people shifted to MassHealth. By the end of the year, CommCare was gone. Bottom line: while MassHealth enrollment soared 23% during the year, spending grew by only 19%. 
    (and note that the federal government picked up 75% of the cost of the newly eligible, with the federal share increasing over time.
  3. The report highlights ongoing racial/ethnic disparities in care. In every category - access, provider communication, integration, and so on - quality was rated lower by Blacks, Hispanics and Asians compared to Whites in the survey. We have long called for an Office of Health Equity in state government and this report drives home the need for more attention to this issue.
  4. Growth in the cost of prescription drugs is the looming health cost issue in Massachusetts. Commercial plans had a whopping 13% increase in pharmacy spending. This is roughly double national projections of 6.8% spending growth for prescription drugs. HCFA has a broad agenda to control drug costs, including more transparency around drug pricing, objective information for doctors to counter marketing claims, and eliminating cost-sharing for cost-effective preventive drugs. And this afternoon, Senate President Stanley Rosenberg raised the issue of the state using bulk purchasing to negotiate larger discounts from drug companies. Lowering the cost for prescriptions is the imperative for state health policy in 2015.
  5. Cost shifting to patients continues. The number of Bay Staters in high deductible plans increased, and overall cost sharing (deductibles and copayments) increased 4.9% for people in commercial insurance plans. This trend, too, is problematic as insurance becomes less a collective sharing of the cost among everyone with coverage, healthy or sick.

There's lots more of good wonk in the report, on adoption of alternative payment systems, growth in employers self-insuring, and more. Go read it.

                     -- Brian Rosman

(UPDATE: mistaken statsitic on Medicaid spending growth removed)