In the midst of frustrations regarding rapidly increasing insurance premiums, welcome news came out of Massachusetts last week. Base insurance rates for small businesses in Massachusetts will increase by an average of only 1.8 percent this year.
Kaiser Health News asked numerous health economists to weigh in on whether this could be a trend that bucks the trend. Not so fast, cautioned Stuart Altman of Brandeis University. Massachusetts has implemented a number of reforms to its insurance and payment systems, which is why it’s so interesting to watch, he said. But there’s more to the story, according to Altman. “The long term cost drivers are still in place.”
Then what’s going on?
Health economist Jonathan Gruber of the Massachusetts Institute of Technology has a few theories. Gruber thinks that the weak economy, increased patient cost-sharing and political demands on insurers and providers to keep price increases in check (courtesy of a report from the state’s Attorney General about the high prices some providers are paid), accounted for the small increase.
Gruber also points to the growth of tiered networks in which patients pay more for different tiers of providers. For example, choosing a high-end hospital would mean a higher cost-sharing payment for the patient.
Massachusetts has implemented global payment contracts in which some providers are paid a fixed amount to care for a patient as opposed to being reimbursed for discrete services. While Gruber gives these plans “zero” credit for lower premium growth, David Cutler of Harvard University suggests that global payments have “fostered a sense of cost consciousness.”
One data point does not constitute a trend. However, a base rate premium increase of 1.8 percent is no small feat in the state with the highest per capita personal health expenditures of any state in the country. At CHI, where our mission involves gathering evidence-based data that can help inform policy-makers and health leaders working on a better, more efficient health care system, this is clearly a trend – or a non-trend, as the case may be – to watch.
For the full text of the article in Kaiser Health News, please click here.