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David_morales Posted by: David Morales, Commissioner, Division of Health Care Finance and Policy

Yesterday marked the first day of the Patrick Administration’s hearings on health care cost trends.  Our goals for the first day of the hearings were to publicly highlight the research data regarding what is driving health care cost growth in Massachusetts, the potential cost of inaction, and the way this issue is experienced on “Main Street” by consumers and employers.

The hearings, convened by the Division of Health Care Finance and Policy, featured opening remarks from key state officials, including Governor Deval Patrick, Senate President Therese Murray, Secretary JudyAnn Bigby, Senator Richard Moore, and Representatives Harriet Stanley, Mary Grant, and Jeffrey Sanchez.

Governor Patrick and Senate President Murray acknowledged the challenges that lay ahead in the path to mitigate health care costs, while highlighting the extraordinary strides the Commonwealth has made in the effort to implement health care reform. All of the state officials present aggressively urged the panelists to identify strategies that will both provide immediate relief to residents and businesses but also lead to lasting, meaningful change in the Massachusetts health care system.

Many of the challenges confronting our health care delivery system were fleshed out by a series of health care policy experts, including Cindy Parks Thomas from Brandeis University, Dianna Welch from Oliver Wyman Actuarial Consulting, and Deborah Chollet from Mathematica Policy Research. In summarizing the key findings from the Division’s analysis, they noted that private spending per member for health care in Massachusetts grew by 15.5% between 2006 and 2008.  More than 75% of the growth occurred in outpatient hospital facilities and physician and professional services. Their research also showed that care is being provided in more expensive settings over time, and that price (not utilization) is the single most important factor fueling rising health care spending.

In addition, nationally-recognized health care economist Len Nichols reminded us of the dire impact that rising health care costs will have on our national and state economies if nothing is done to mitigate health care cost growth.  His findings showed that if the current growth in health care costs continues, 1/3 of median family income will be consumed by health care premiums by 2016.

Subsequent presentations by the Commissioner of the Division of Insurance Joseph Murphy and Attorney General Martha Coakley echoed some of the Division’s findings. For example, one area of particular concern raised is the wide variation in prices paid by private health plans for the same service at different providers. The Attorney General’s analysis also showed that this variation is not tied to quality of care or complexity of services.

The hearings next featured two panels –employers and consumers, respectively.  Employer panelists described the unsustainable costs of employer-sponsored insurance and the difficulty in hiring new workers or raising wages while trying to continue to pay for employee health insurance coverage. The consumer panel reminded us of the importance of prevention, and that quality and cost are as critical as choice.  The panelists asserted the need to ensure access and coverage, and encouraged policymakers and stakeholders to address costs with the same sense of urgency.

In closing, I welcome everyone to attend the next two days of hearings, which will be held on Thursday, March 18 and Friday, March 19. The last two days of hearings will feature decision-makers and leaders from the health care sector and they will discuss – from their perspective – the factors fueling rising costs, characteristics of the Massachusetts the health care delivery system and finally, tangible long-term policy solutions to this immediate dilemma.

The hearings begin at 9:00 a.m. at the Joseph P. Healey Library University Club, 11th floor, University of Massachusetts – Boston. As a reminder, oral comments will be accepted from the public on Friday, March 19 at 1:00 p.m. Please visit www.mass.gov/dhcfp/costttrends for more information including a link to live streaming video of the hearings, the detailed agenda, and copies of witness testimony.

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