Health spending slows, but pharmaceuticals drive new costs, health policy chief says

Telegram & Gazette (Worcester, MA)

March 14-- Mar. 14--WORCESTER -- Massachusetts has long been an innovator in health care. But in 2009, three years after the state passed universal health care access -- the model for the federal Affordable Care Act adopted in 2010 -- and the state led the nation in having nearly all its residents covered by health insurance, Massachusetts was "the most expensive place on the planet to get health care," according to David M. Seltz, executive director of the state Health Policy Commission.

Health spending per person in Massachusetts was 36 percent higher in 2009 than the national average, and 152 percent higher than spending in other developed countries.

Mr. Seltz led a panel of health policy experts who spoke at University of Massachusetts Medical School on Thursday to participants in Leadership Worcester. Leadership Worcester is a nine-month program, sponsored by the Greater Worcester Community Foundation and the Worcester Regional Chamber of Commerce, that explores different themes relevant to the Worcester community.

Making health care not only accessible to all, but sustainable and affordable, is "a generational challenge," Mr. Seltz said.

In 2017, 43 percent of state residents with health insurance reported having some affordability problem in the previous year, according to Mr. Seltz. Nearly one in four deferred medical care because of cost.

As big a problem as it is, health care cost trends have been tamed slightly since the Legislature enacted a state law, Chapter 224, in 2012. Among other provisions, the law established the Health Policy Commission and targeted benchmarks for reducing health care spending growth.

The commission can't mandate spending or price caps, but tries "to push and nudge the private market to do this," Mr. Seltz said. The ultimate goal is better health and better care at a lower cost.

He said his agency focuses on research and reporting; convening the right people to tackle health system problems; making grants and investments to test new ways to deliver care; and serving as a consumer protection watchdog.

The average annual health care cost increase in Massachusetts was 3.2 percent for the commission's first five years, averaging less than the benchmark 3.6 percent increase and lower than national average trends. In two of the five years, though, state increases were higher -- with one year jumping as much as 4.8 percent.

Health care costs increased by 1.6 percent in the most recent year measured, 2016 to 2017.

By 2014, Massachusetts was the second most expensive state for health care, ceding the top spot to Alaska.

Release of a new treatment for hepatitis C was a benchmark buster the year it came out, according to Mr. Seltz. With more high-priced but powerful therapies in the pipeline, including gene therapies being developed at UMass and elsewhere, new pressures are driving costs upward.

Mr. Seltz said that Massachusetts residents who require insulin to manage their diabetes saw a 50 percent increase in insulin costs over three years. He blamed the price increase, which doesn't reflect product innovation, on profit-seeking by manufacturers.

"We are, as a society, price takers on pharmaceutical drugs," he said.

The Health Policy Commission has recommended to the Legislature that pharmaceutical companies be included in its affordability initiatives.

Not just prices, but also how care is organized and paid for affect health care costs.

Through its grant-making program, the commission has been working with hospitals, including UMass Memorial Medical Center, to improve care and reduce the length of stay in the neonatal intensive care unit for babies born with opioids in their system.

The initiative found the average length of stay in the NICU among these fragile infants could be reduced by half, to eight days from a median 17 days, with innovations such as involving mothers in the care team; encouraging breastfeeding and skin-to-skin contact; and having volunteers calm babies by cuddling them, among other features.

The NICU model also highlighted why it matters how care is paid for. One hospital, which Mr. Seltz didn't name, was ready to quit the program after grant funding ended because fewer hospital days meant less revenue. The commission worked with the hospital, using "soft power," to raise funds to continue.

"That is so tragic that that mindset is built into our health care system," Mr. Seltz said.

The Health Policy Commission has also made recommendations to the Legislature on protecting patients from surprise bills from providers who don't participate in the patient's insurance network. Incidents in which patients have been billed for thousands of dollars by providers such as radiologists and anesthesiologists who didn't take the patient's insurance, but worked at a hospital that was in the network, have gained national attention.

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