Massachusetts health care costs revisited

Last month I posted information about a chart pack tracking health care costs in Massachusetts, which showed that the introduction of health reform into Massachusetts has not accelerated the cost trend. In the comments section, Erick Novack wrote:

David- looking through the BCBS slide deck– how do you explain slide 10, which clearly shows an upward trend in spending since 2006, and slide 12, which shows a decrease in premiums?

Can you find even a single mention in any of the slides that might put an iota of responsibility in the lap of the insurance industry? patients?

The study/results/conclusions seem intent on getting to blame providers/hospitals… and to justify the goals of MA politicians who want more political control over health care dollars– and decisions.

These are reasonable points, but all can be addressed. First, the big picture issues addressed in the 2nd and 3rd points:

  • The overall message of the materials is that Massachusetts is an expensive state for health care and continues to get more expensive. However, health reform does not seem to have changed the trajectory
  • I think Novack’s objections to the contents and conclusions are that provider price increases are identified as the main driver of aggregate cost increases, and that provider market power is pointed to as the cause. I suppose that could be construed as blaming providers and letting plans and patients off the hook, but from my perspective as a purchaser of health insurance I look at it as a failure of the health plans to drive sufficiently hard bargains with providers. Also, benefit designs in Massachusetts are heavily weighted toward traditional, broad network products that give the patient/consumer no incentive whatsoever to consider costs. That, for example, is why many people drive past their community hospital on the way to MGH for a routine colonoscopy. The blame for that goes to the health plans–for not offering better products, and purchasers –for not demanding them
  • MA politicians may seize on the data to support their goals, but I can’t believe a health plan foundation would intentionally cede power to politicians at the expense of the private sector

Now for the nitty gritty explanation for the first point:

  • Slide 12 shows private employer premium data, which is correlated with total system spending, but has different year-to-year variation
  • Slides 8 -11 show total health system spending data, which includes out-of-pocket costs as well as public spending for Medicaid and Medicare. This data set is only released every five years by CMS and the latest release from December 2011 only goes to 2009
  • In comparing slides 10 and 12, the distinction between the 2009 and 2010 endpoints is significant because of how much spending seems to have slowed down, particularly in MA, in 2010
  • Slide 10 also shows total aggregate spending by payer type, whereas premiums are more akin to per capita. Because total/aggregate spending includes increases due to population growth it’s hard to make straight side-by-side comparisons with premium data



April 17, 2012

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