Massachusetts' first annual report on the state healthcare market shows high costs putting pressure on consumers, just as the state is embracing alternative payment models.
Massachusetts has the second highest per capita healthcare spending in the country -- $9,278, based on 2009 data -- and the state government is banking on a reform law establishing accountable care budgeting in public programs and tying healthcare spending increases to gross state product.
On the eve of the reforms, consumers are paying more and more for insurance to cover more expensive healthcare, according to the state-funded Center for Health Information Analysis.
Between 2009 and 2011, average insurance premiums for Massachusetts residents increased 9.7 percent, while benefit values decreased 5 percent, according to the Center's study.
And at the same time, commercial payer reimbursement "continued to be made to high priced providers," the study said. In 2011 and 2012, approximately 80 percent of healthcare spending for acute hospitals and physicians "was concentrated in higher priced providers."
As it broke down among Massachusetts' providers, 31 percent of all private insurance reimbursement for acute hospital care in 2012 went to Partners HealthCare, about 10 percent went to CareGroup, the parent company of Beth Israel Deaconess Medical Center, about 7 percent went to the University of Massachusetts Memorial health system, about five percent when to the Lahey health system, about five percent went to the Steward health system, and the rest went to independent providers.
Somewhat like the provider market, the Massachusetts commercial health insurance market "remains concentrated with a few large payers that account for the vast majority of enrollees," the study said. Blue Cross Blue Shield, the largest, accounts for 45 percent of the commercial market, followed by Harvard Pilgrim (20 percent) and Tufts Health Plan (14 percent).
Most Massachusetts residents, about 62 percent, are insured through their employer, and nearly half the commercial market is self-insured, according to the Center's study.
Employees in Massachusetts, as elsewhere, "are paying increasingly more out-of-pocket for their health care," the study said, with deductibles increasing 40 percent between 2009 and 2011.
Spending for commercially-insured Massachusetts residents increased 3.8 percent between 2010 and 2011.
There has been some transition from fee-for-service to alternative payment models in recent years, "but only in commercial HMO products," the study said.
In 2012, almost 40 percent of all commercial payments were made through a "global payment/budget framework," all within HMOs, while the rest was fee-for-service reimbursement. Blue Cross largely led the state in moving towards accountable care, with 49 percent of all payments in 2012 made through a global budget.
The market report comes ahead of state hearings this fall on healthcare costs specifically and, in general, implementing Chapter 224, the payment reform law signed last year that's intended to save $200 billion over 15 years.
Through 2017, the law calls for the growth rate of healthcare spending in the state to be tied to increases in gross state product, and for 2018 through 2022 calls for spending growth to be set "at, or slightly below," gross state product.