Danger ahead? Massachusetts health costs are rising – fast.
By Sarah Kliff , Updated:
Massachusetts has been at the forefront of experimenting with new ways to
keep health-care spending down after decades of sharp increases. Last year, it
passed a law that put health costs under a global budget: They cannot grow
faster than the rest of the Bay State economy.
That’s the target, at least. As Robert Weisman at the Boston Globe
reports, health insurance companies are sounding some early warnings that
the state could go over budget:
Representatives from the state’s nonprofit health plans as well as
national for-profit insurers doing business in Massachusetts estimated the
“medical cost trend,” a key industry measure, will climb between 6 and 12
percent this year — higher than last year’s cost bump and more than double the
3.6 percent increase set as a target in a state law passed last year.
The new projections of accelerating costs are a sobering sign those
moderating trends may be fading.
Why did medical costs speed up? Massachusetts’s health insurance carriers
pointed to a few factors. The economic recovery meant that Bay State residents
had more income to spend on health-care services. An especially severe winter
flu season may have also bumped up demand.
Massachusetts experts have, for awhile now, maintained
some skepticism about whether the legislation would actually keep costs
down. While the state has achieved near-universal coverage with its 2006 reform
law, handing out health insurance cards is a less challenging task than bringing
down the price of health-care services.
What happens if costs do grow as quickly as these health plans predict? It’s
not quite clear: There is a new agency, the Health Policy Commission Board, that
has the authority to review the rates that insurance companies and doctors
charge patients.
If that board does find a rate increase inappropriate, it can contact the
doctor or hospital, and draw a plan for reducing cost. They cannot do much more
than that, such as set their own rates, which would give them significantly more
sway over health-cost growth.
Stuart Altman, a health economist at Brandeis University who chairs the
board, argues that it’s an appropriate amount of power for the time being: The
panel is meant to be a watchdog, rather than a regulator.
“The commission was set up to [be] a watchdog and see to what extent the work
the private sector is doing is working,” he told
me in a recent interview. “If after two or three years from now, it’s
working, that’s great. If not, the commission can come back to the legislature
and say, ‘This isn’t working, we need more power.’ I think that was the right
way to structure this.”
If costs growth go as health insurance plans think they will, Altman may soon
find himself making that request.