Prices, usage drive up state health care costs

Prices, usage drive up state health care costs

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Massachusetts residents use health care services at a significantly higher clip than their U.S. counterparts, and the cost of those services is higher than in any other state, according to a new report that pegs per capita spending on health care in Massachusetts 36 percent higher than the national average in 2009, the State House News service reported last week.

The report by the state Health Policy Commission, which heard testimony this fall from industry stakeholders, found that in addition to higher utilization rates, Massachusetts also has higher prices than the U.S. average across all payer types, from Medicare and MassHealth to commercial plans.

“Spending in Massachusetts is the highest of any state in the U.S., crowding out other priorities for consumers, business, and government,” said the report, which was released for discussion at the commission’s annual meeting on December 18. “Over the past decade, Massachusetts health care spending has grown much faster than the national average, driven primarily by faster growth in commercial prices.”

The report, which drew many of its conclusions based on data from 2009, does not measure cost escalation against the 3.6 percent growth benchmark established in the 2012 cost control law. The benchmark will be reviewed in 2014, and a report next year will measure progress against the benchmark.

After expanding coverage opportunities with a 2006 law, state policymakers are hoping new transparency, cost control, and care delivery methods will bring health care cost growth in line with or beneath growth in the state economy. The preliminary findings of the 2013 cost trends report will factor into the continuing debate over whether the cost control law is working as intended or whether it needs modifications, and whether intervention is required to stem cost growth in a huge economic sector.

Among the report’s findings:

Health care spending as a proportion of the state economy rose over the last decade, from under 13 percent in the early 2000s to 16.8 percent in 2009, a rate estimated to roughly hold through 2012. The report also used 2009 figures in concluding per capita health care spending in Massachusetts is the highest among states, at $9,278, compared with U.S. per capita health care spending in 2009 of $6,815.

Spending on hospital care and long-term care accounted for the bulk of the difference between per capita health care spending in Massachusetts and nationwide. Higher per capita state spending on hospital and long-term care was evident in the massive Medicare and Medicaid programs as well.

Compared to the United States, Massachusetts has a higher percentage of residents enrolled in Medicaid and spends more per Medicaid enrollee. Using 2009 figures, the report estimated $8,278 in expenditures per Medicaid enrollee, 21 percent higher than the U.S. figure of $6,826, due to factors such as the health status of enrollees, the “breadth of benefits,” and higher reimbursement rates to physicians. At 20.3 percent, Massachusetts has 23 percent more of its residents enrolled in Medicaid than the U.S., at 16.5 percent, a situation attributed to broader eligibility categories and differences in demographics.

Massachusetts residents used outpatient hospital services 72 percent more than their U.S. counterparts, and inpatient admissions were 10 percent higher than nationally. Emergency department visits in Massachusetts were 13 percent higher, and outpatient surgeries were 27 percent higher, than the U.S.

Major teaching hospitals play a far bigger role in the delivery of inpatient care in Massachusetts compared with the national average. For example, 40 percent of Medicare discharges in Massachusetts are from major teaching hospitals, compared to 16 percent nationwide.

At 15.4 percent, the Massachusetts asthma rate was higher than the U.S. rate of 13.6 percent, but Massachusetts showed lower rates of chronic disease prevalence than the U.S. as a whole, including rates of diabetes, coronary heart disease, cancer, and depression.