Insights from the Cost Trends Hearing 2023: Centering Affordability and Equity in the Next Phase of Massachusetts Health Care Reform

Day Health attended the Health Policy Commission’s (HPC) 11th annual Health Care Cost Trends Hearing on Wednesday, November 8th, 2023. Here are three key takeaways from the day:

1. Health care costs in Massachusetts are rising at an unsustainable rate, far exceeding the HPC’s benchmark growth rate and outpacing wage growth and inflation,

2. Health equity and affordability are inextricably linked, and

3. Progress toward equity and affordability can only be achieved via shared responsibility and participation across the Massachusetts health care system.

Below, we take a deeper dive into each of these insights and end with ideas on how we can partner with health care organizations in Massachusetts to be part of the solution.

Health care costs in Massachusetts are rising at an unsustainable rate, far exceeding the HPC’s benchmark growth rate and outpacing wage growth and inflation.

According to the HPC’s 2023 Cost Trends Report, Total Health Care Expenditures (THCE) per state resident increased by 9% from 2020-2021, which is about three times the HPC’s 2021 cost benchmark. Identified services like labs, imaging, endoscopy, specialty services, inpatient stays, clinician-administered drugs, and prescription drugs are priced excessively at more than 200% of what Medicare would reimburse, leading to about $3 billion of excessive spending in the state. Commercial spending growth exceeded the national average for the first time in 11 years at 11.6%.

Excess spending is also driven by excessive or unnecessary utilization of health care services and administrative spending. Care is often provided in expensive settings, such as academic medical centers or emergency departments, instead of in community hospitals or other lower cost settings. Many panelists agreed that prior authorization requirements are burdensome and often unnecessary, diverting resources away from the actual provision of care. Dollars saved by cutting back on administrative costs and unnecessary care provision could be re-invested into areas such as primary care and behavioral health.

Health equity and affordability are inextricably linked.

As Governor Maura Healey noted in her keynote speech, “disparities in health outcomes stem from inequities in the health care access system.” Rising costs disproportionately impact low-income individuals and people of color – Governor Healy noted that over half of Black, Multi-racial and Hispanic individuals report that their families struggle with health care affordability in Massachusetts. Excessive spending is transferred to Massachusetts families in the form of high premiums, co-pays, and co-insurance, forcing them to choose between health care or necessities such as food or housing. To address rising costs, low-income families may take on hefty medical debt, delay seeking care until necessary, or opt to forgo care all together.

Hospital or service line closures often occur in low-income areas and communities of color, threatening access to care and contributing to racial and ethnic health disparities. Commissioner Dr. Alecia McGregor spoke to how these closures exacerbate vast racial inequities in maternal mortality and morbidity in Massachusetts.

Sheila Och, Chief Engagement and Equity Officer at the Lowell Community Health Center and a member of the Health Equity Compact, emphasized the vital role of community health centers (CHCs) and community health workers (CHWs) in narrowing health disparities and constraining costs by providing culturally responsive care and holistic, equity-centered health interventions. Despite this, CHCs are historically underfunded, relying on a “patchwork of grants” to keep their doors open. Och asserted the Commonwealth’s need to re-think traditional health care funding models to invest in programs and people, such as CHCs and CHWs, that most effectively address the interdependent issues of equity and affordability.

Progress toward equity and affordability can only be achieved via shared responsibility and participation across the Massachusetts health care system.

Panelists and witnesses representing most parts of the MA health care ecosystem agreed that payers (public and private), providers, employers, and pharmaceutical companies must come together to make affordability and equity realities of health care in the Commonwealth. As Dr. Kevin Tabb, President and CEO of Beth Israel Lahey Health shared, “the entire state needs to be a system.” Sarah Iselin, President and CEO of Blue Cross Blue Shield of Massachusetts, offered a similar thought when she said “we need a public-private partnership. The private sector cannot do this alone.”

As Chair Deborah Devaux stated, we cannot understand progress without a common metric. The HPC’s cost growth benchmark, while valuable, needs enhancement. As part of its 2023 policy recommendations, the HPC suggests that new benchmarks measuring affordability and health equity should be added to the current framework, and entities should be evaluated on these measures on a yearly basis. Multiple panelists asserted that pharmaceutical companies, which have an outsized impact on rising health care spending in Massachusetts, should be subject to the same evaluation. And entities must be held accountable. As Governor Healey stated, we need to “sharpen tools” at the HPC and the DOI for understanding key drivers of premium growth.

Toward the end of the hearing, the conversation turned to going beyond the data and prioritizing outcomes and measurement. Dr. Tabb noted that, “while progress has been made, we’re still here talking about the same issues as eight or nine years ago.” Michael Curry, President and CEO of the Massachusetts League of Community Health Centers and Co-Founder of the Health Equity Compact, punctuated the afternoon by asserting that “we can lead again in Massachusetts like we did in other iterations of health reform.”

To begin taking action on affordability and equity, the Report and Hearing offered the following additional recommendations:

• Reduce inequities in maternal health by promoting birth in community hospitals or birth centers as opposed to academic medical centers, and investing in the doula and midwife workforce

• Improve health equity through premium support for employees with lower incomes

• Prioritize investment in social determinants of health

• Use payor/provider contracts to require health data stratification

• Pay for performance on health equity targets

• Expand approved uses of innovative funding strategies (Distressed Hospital Fund, Payment Reform Trust Fund) to pursue health equity

• Strengthen tools to align the supply and distribution of services with community need

• Support workforce diversity

• Use Race, Ethnicity, Language and Disability (RELD) data to identify inequities in access to Medication for Opioid Use Disorder

How Day Health Can Help

Day Health embraces the imperative of shared responsibility and believes that everyone has a role to play in changing the trajectory of health care spending in Massachusetts and achieving health equity. The graphic below outlines ways we can partner with healthcare organizations to take action:

As Governor Maura Healey stated, only equity can unlock systemic success. Day Health is committed to being part of the solution. For more information on how we can partner with your organization, contact us at contact@dayhealthstrategies.com.