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Cost conundrums persist in land of expensive medicine

By Healthcare Finance Staff

For a state trying to get a handle on notoriously high healthcare spending, there are some reasons to be cautiously optimistic and keep following those with the most market power.

In Massachusetts last year, total healthcare spending grew at a rate of 2.3 percent, well below the state-mandated benchmark of 3.6 percent but also a bit above the 1.5 percent growth rate of inflation, according to a report by the Center for Health Information and Analysis, an independent state agency.

Massachusetts alternatively claims the highest or some of the highest per capita healthcare costs in the country, and the Center for Health Information and Analysis is tasked with helping state regulators find areas for quality and efficiency improvements.

The 2.3 percent growth rate in 2013 is "positive," wrote executive director Áron Boros, but it's not necessarily cause for celebration and other concerns linger.

While the per capita growth in total healthcare costs was lower than the state-imposed benchmark, it rose faster than inflation, for one thing. For another, Massachusetts' slower growth was consistent with trends of slowing cost curves nationwide.

Plus, there remains a far amount of variation between payers and providers, and alternative payment methods -- something lawmakers and regulators in Massachusetts and elsewhere have been banking on for reform -- stalled in 2013.

As one indicator, both the largest insurer, Blue Cross Blue Shield of MA, and the largest physician group, Partners Community HealthCare, had among the largest spending increases last year.

In the case of insurance overall, though, in 2013 commercial premiums and member cost-sharing did not increase and benefit levels remained steady -- a departure from a decade's trend of increasing member costs and stagnating actuarial benefit levels.

Commercial premium trends and benefit levels in Massachusetts (Source: CHIA). 

Overall, across seven commercial payers in all market segments, premiums decreased by an average of 1.8 percent. Only two insurers increased premiums, Fallon Community Health Plan (by 0.2 percent) and Harvard Pilgrim (by 0.5 percent). Blue Cross Blue Shield premiums on average fell by 0.9 percent last year, Cigna by 4.3 percent, Health New England by 1.2 percent, Partners-owned Neighborhood Health Plan by 2.5 percent and Tufts Health Plan by 1.7 percent.

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