Report: Health care costs in Massachusetts are growing slowly as out-of-pocket costs rise

DATE : September 12, 2018

The growth in health care spending in Massachusetts has slowed significantly - but the amount individuals are paying for their care is still increasing, according to the Center for Health Information and Analysis's annual report, which was released Wednesday. 

The report had largely good news for the state overall, but less good news for individual consumers of health care.

"It isn't as if all the numbers in the system are completely positive, but we think it's a good year," said Ray Campbell, executive director of CHIA.

According to CHIA, total health care expenditures in Massachusetts in 2017 were $61.1 billion, which represents an increase of just 1.6 percent from 2016. That comes out to around $8,900 per resident spent on health care. 

It is less than the 3.6 percent benchmark, which was the target for growth in health care spending set by the state Health Policy Commission. It is also the lowest rate of growth in the five years the state has been measuring, down from 2.8 percent in 2016 and more than 4 percent the two years before that.

"Twelve years after leading the country in expanding health care access, Massachusetts is now leading the country again in lowering health care cost growth," said Stuart Altman, chairman of the Health Policy Commission, in a statement.

Campbell said the lower growth rates appear to be part of a trend, after three years of escalating cost growth and two years where the rate of growth has been slowing down.

Total spending on MassHealth, which is the state's Medicaid program, actually decreased by 0.2 percent because of a 2.4 percent drop in MassHealth enrollment. This was driven mainly by steps the state took to ensure that people who are on MassHealth are actually eligible.

But at the same time, the amount individuals are paying for their care is rising. Altman said although overall health care spending growth is low, "There are concerning trends related to the affordability of care and coverage."

Between 2016 and 2017, health insurance premiums grew by 4.9 percent, to an average of $483 per member per month. The highest costs were paid by small businesses. 

Member cost-sharing, which is the amount paid in copays and deductibles, grew by 5.7 percent to an average of $52 per member per month. 

By 2017, 28.2 percent of people with private commercial insurance were enrolled in high deductible plans, which are plans with deductibles of at least $1,300.

Campbell said two years ago, only 20 percent of health plans were high deductible, but now these plans are penetrating all parts of the market. He said it raises some questions about whether the slowdown in health care spending is due to people going to the doctor less often because of high out-of-pocket costs.

"Bending the cost curve has been an imperative for a long time, but I think issues of equity and affordability ... are becoming more important," Campbell said. 

Campbell said premium increases tend to fluctuate year to year. But the increase in out-of-pocket spending seems to be a trend, driven by the adoption of high-deductible health plans but also other factors.

"There's not a single narrative that explains it all," Campbell said. "In general, the fact that cost sharing is growing faster than health care inflation is not a good thing."

With the continuing high costs for individuals, one-quarter of respondents to a state survey said they went without needed medical or dental care because of the cost, and 17 percent reported having medical debt, despite most of those people having insurance.

The price of drugs has long been a major driver of health care spending, although the growth has slowed down in recent years. While the largest share of spending this year was in hospital care, the areas where the costs were rising the fastest were in pharmacy and hospital outpatient care.

Campell said more work needs to be done to figure out what is leading to the higher spending in these areas.

The Massachusetts Biotechnology Council, which represents biotechnology companies, said the fact that drug cost growth was only 5 percent this year, down from 12 percent in 2015, shows that industry efforts to lower drug costs are succeeding.

"The biopharma industry in Massachusetts continues to bring value to the overall health care system and to patients, and is constantly looking for new ways to lower drug costs and improve patient access," MassBIO CEO Robert Coughlin said in a statement.

 - Shira Schoenberg,

CHIA on Twitter