Massachusetts' surge in healthcare costs are an urgent issue for all residents. We all need medical care. And we all pay for healthcare through physician bills, health insurance or taxes that fund Medicare and Medicaid.
In 2023, about four Bay Stators to ten people reported they were struggling to provide health care, and think that one in three people avoided getting the medical care they needed because of the cost.
Total healthcare costs measured by the CHIA increased 8.6% between 2022 and 2023, far exceeding the state's target, much higher than 3.6%. This amounts to $11,153 per resident. The average annual premium for a Family Health Insurance Plan was $26,355 in 2023, the second highest in the country – that average family spent another $2,715 out of their pocket. Healthcare costs have grown faster than local inflation.
A policy change that simply shifting costs from one entity to another is not a solution. Innovative strategies such as using artificial intelligence to write medical notes and providing hospital-level services at home can help with margins. In the long run, the system will need to be readjusted to prioritize primary care. This will help people stay healthier and get too expensive to receive care.
For now, here are four ripe areas of change that can reduce costs.
Eliminate low value care. In 2018, the Massachusetts Health Policy Board discovered that the state's three largest commercial health plans paid $80 million over two years for “low-value” care. These are specific procedures suggested by evidence suggesting that it is of little value to the patient, such as vitamin D deficiency screening. Low-risk cardiac stress test before non-cardiac surgery. Or imaging for headaches.
Of course, there are patients who need these procedures and physicians need the flexibility to do them when guaranteed. But Alan Sager, professor of health law, policy and management at Boston University, points out that the reason many of these procedures are as economical as clinical is whether doctors get more rewarded for doing more, or doctors worry about medical litigation.
Reduction of managed waste. Healthcare providers spend a huge amount of time and money on administrative tasks. The Massachusetts Health Hospital Association estimates that Massachusetts hospitals and physician practices spend $3.5 billion a year on claims and insurance-related jobs. For example, advance approval is an important tool for insurers to ensure patients receive appropriate care at the lowest cost. However, its use may be limited.
Requiring prior approval makes sense for medications and treatments that are expensive or non-routine, but are not generic drugs commonly used to treat chronic diseases. This process can also replace telephone or fax-based systems with online portals, creating standard forms and document requirements across insurance companies, making them more efficient.
Prescription drug price. Prescription drug spending was the main driver of increased overall spending. In 2023, $11.2 billion was spent on prescription drugs in Massachusetts, up from $10.2 billion the previous year, even after rebate manufacturers provided insurance companies. Given the popularity of expensive GLP-1 weight loss drugs, we expect spending to increase in future years.
Congress took the first step by requiring profit managers at drug manufacturers and pharmacies to report financial information to regulators. The next step is to find a way to lower the price using that data. Gov. Maura Healy suggests punishing drug makers for excessive price increases. The board supports laws that prohibit pricing strategies used by pharmacy profit managers to direct consumers to purchase expensive drugs rather than generics.
Provider pricing. In many cases, different stores charge different prices for their products. In healthcare, hospitals with cutting-edge technology are justified by charging more than small doctors' offices. However, current price fluctuations for providers are excessive. For example, the Dana-Farber Cancer Institute charges HealthAlliance-Clinton Hospital for $22,392 from Keytruda, a standard-dose cancer drug, while HealthAlliance-Clinton Hospital charges $11,099, according to Chia.
Mammogram prices in 2022 were $100 at Bay State Noble Hospital and $268 at St. Anne Hospital, according to the state's price transparency website. The Health Policy Committee proposes lawmakers will cap price increases at expensive facilities. states such as the price of Cap Hospitals in Oregon and Rhode Island. Another option proposed by the committee is to limit “facility fees.” Hospitals are billed more for lab tests conducted in hospital clinics than for doctors' offices.
Healthcare reforms are well known for being tricky, and try to cut costs against the risk of limiting access and hurting local providers. The challenge is finding ways to eliminate waste in the system. However, the challenges should not thwart action on this looming problem. The specific ideas above are a valuable start.
The editorial represents the views of the Boston Globe Editorial Committee. Follow @globeopinion.
