Massachusetts struggles with cost control after reducing uninsured

Health system reforms in Massachusetts may have reduced its uninsured population to the smallest of any state, but the effort has not controlled growth in health care costs -- at least not yet.

Five years after Massachusetts launched its groundbreaking health reform initiative, health care costs continue to grow, emergency department visits have increased, and many more residents have high-deductible health plans, according to a critique released on Oct. 25 by Physicians for a National Health Program, an advocacy group with 18,000 members who support a single-payer health system.

These trends could become a national story under the health system reform law, which largely was based on Massachusetts' reforms, Benjamin Day said. He is the report's lead author and executive director of "Mass-Care: The Massachusetts Campaign for Single-Payer Health Care." The state's health insurance exchange offers health plans with income-based subsidies, while a Medicaid expansion covers virtually all residents earning up to 150% of the federal poverty level.

"Based on what we've seen in Massachusetts ... it's reasonable to expect a similar course for the Affordable Care Act: a significant initial expansion of insurance coverage and a moderate improvement in access to care," Day said.

As few as 2% of Massachusetts residents are uninsured, according to state estimates, but ongoing physician shortages have been exacerbated by thousands more residents gaining health coverage, according to the report. The state still has some of the costliest insurance premiums and the highest per capita health spending in the country. Emergency department visits have increased 13% since 2006. In addition, 11% of residents have health coverage with deductibles of $1,000 or more compared with 3% in 2006, mirroring a national trend.

However, some health care cost increases have been held in check. For example, premium hikes for Massachusetts' subsidized exchange coverage have been limited to about 3% annually, said Richard Powers, spokesman for the Massachusetts Health Connector, the independent agency that runs the insurance exchange.

Also, state leaders continue to work on legislation to enact global payments, a type of pay bundling that is expected to restrain cost growth further. A significant first step in this movement occurred on Oct. 5, when Partners HealthCare -- a local network of hospitals, health centers and physicians -- signed a risk-based global payment contract with Blue Cross Blue Shield of Massachusetts. The contract requires Partners to meet or exceed quality standards for its patients, keep cost growth lower than the insurer's network average, and accept financial risk. The contract is expected to save the insurer $240 million over three years.

Meanwhile, Massachusetts residents have significant concerns about health care costs, according a poll published Oct. 21 by the Blue Cross Blue Shield of Massachusetts Foundation. For example, 78% of residents believe health care costs in the state are a major problem or a crisis. Residents were divided on the solutions, with one-third expecting government action to solve the problem, 27% expecting insurance companies to help control costs, and 17% saying hospitals and doctors could help.

The Physicians for a National Health Program report is available online (link), as is the Blue Cross Blue Shield of Massachusetts Foundation poll about public perceptions of health care costs (link).