Healthcare Costs Rise - Officials Stand Up and Pay Attention

September 21, 2007

Yesterday, Massachusetts State officials met to discuss objectives for implementing the new law that requires most adults to have health insurance, but the topic of "cost control", a topic pressing attention, was left for further debate. State health care costs are increasing and government, businesses and individuals are struggling to cope. These rising costs are under constant scrutiny in the preliminary wake of near-universal coverage laws.

Meeting Overview

• Connector Executive Director, John Kingsdale, told board members today that controlling rising costs of private health insurance is his "number one anxiet ".
• Dolores Mitchell, Director of the state Group Insurance Commission and Connector board member, said draft objectives calling for the board to "begin to develop& cost containment strategies to ensure health care reform´s long-term success are "a little on the weak side" and required tougher wording.
• "Some sense of urgency in that I think is very important," said Mitchell, remarking that writing checks that match the growing costs of health care will make cost control a pressing matter.
• Connector Board Chair, Leslie Kirwan, who is also Gov. Patrick´s top budget aide, said the administration is in the process of formalizing cost control plans for at least six state agencies. Kirwin put an emphasis on purchasing power as a major solution for rising costs and went on to say that "there will be more stress on collaborating."
• Kirwin also pointed to the insurance expansion law and its growing costs, insurance for public and inmate care in the corrections system, and Medicaid. Kirwin said, "It´s a trend that we really have to keep our eye on."
• Kirwin stressed her concerns that of the $26.8 billion budget, nearly half is being consumed by healthcare costs and adding that "there are a lot of other things that the state has to be in the business of." Kirwin, in reference to abundant talk of healthcare reform on a presidential campaign level, reiterated to board members that there is a tremendous amount of focus on health reform law here, stating "that will be doubled or tripled given what's going on nationally."

An additional note: On Thursday, the Connector approved a $4 million line of credit to cover potential administrative expenses, though Kingsdale remarked that they do not plan on using it.

On a National Level

The National Coalition on Health Care study indicated that national health care spending rose 6.9 percent (twice the rate of inflation) in 2005, creating strains on household, business and government budgets. According to studies, Massachusetts spends more on health care than most other states.

Former Governor Romney, a Republican presidential candidate and key player in last year´s health law, bashed the health plan outlined by Sen. Hillary Clinton, Democratic presidential candidate, in a Wall Street Journal op-ed. Romney said Senator Clinton´s plan will lead to more government insurance, higher taxes and the imposition of a national model on states. Clinton representatives reinforced the plan by stating it will cover all Americans and improve care by lowering costs and improving quality.

Massachusetts and the Connector Stats

A Massachusetts survey conducted between January and July, showed that 355,000 uninsured individuals in Massachusetts (5.7 percent) remain without health insurance. According to Connector officials, 170,000 individuals have received coverage due to the reform law, which includes:

• 115,000 enrollees as of Sept. 1 in Commonwealth Care
• A fully-subsidized program for low-income individuals
• 7,000 enrollees, as of Sept. 1, in the non-subsidized Commonwealth Choice program

By July 1, 2008, Officials are hoping to see 35,000 enrollees and are looking to attract individuals not eligible for subsidized plans.

Authority Officials have said that call centers that are set up to handle inquiries from uninsured individuals who face tax penalties unless they get insurance by January are experiencing heavy volume. Officials are trying to steer more traffic to their web site as Connector web site visits have declined. The Connector's call center stats are:

• 11,964 calls during the last week of August (1,067 of those calls were categorized as "abandoned.")
• Call volume has ranged between 2,000 and 3,500 calls per week since early July.
• More than 49,000 around July 1, and 29,000 in early June

Officials claim the spike in July visits was due to implementation of key aspects of the reform law in that month.

Prescription Drug Coverage & The Pool

Next month, a plan is in the works to bring an alternative prescription drug coverage option before the board. Beginning Jan. 1, 2009, drug coverage will be part of the minimum required coverage. The Connector is attempting to have plans that meet consumer needs on a coverage and cost standpoint basis. Kingsdale plans to discuss this in greater detail at the next Connector board meeting scheduled for Oct. 11.

Kingsdale also brought forth to board members that the Patrick administration is currently in negotiations with federal health and human service officials in an effort to create an extension of an expiring state waiver. This waiver is a driving force behind many key health care reform initiatives and is responsible for the delivery of hundreds of millions of dollars in federal funding. Kingsdale said, "it would be a showstopper were it not to happen, which it won´t."

Thomas Dehner, Medicaid Director and Board member, reported draws on state´s uncompensated care pool (transitioning to the safety net pool) are declining. Dehner states that this is trend that officials are hoping will continue as funds previously dedicated to reimbursing providers for free care to the uninsured are channeled into subsidies to help low-income individuals get insurance.

The safety net pool discussion continued with public policy makers aware of the continued demands causing pool strains, but will continue efforts to reimburse providers for uninsured care, while funds are used for subsidies that were previously dedicated elsewhere. Pool discussions will continue as Dehner notes the recent "dramatic" changes.

Please feel free to e-mail any questions, comments or concerns. We will continue to update you as more information becomes available.

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