Shining A Light On Rising Health Care Costs

Richard T. Moore (D-Uxbridge), Senate Chairman of the Legislature’s Joint Committee on Health Care Financing and the Special Senate Committee on National Health Reform, says the public deserves full and honest answers from both hospitals and insurers on the troubling issue of rising health care costs:

With the new year upon us, there is widespread concern about recently announced dramatic increases in health insurance premiums by most carriers. Despite near universal interest in health care cost containment, health insurance costs continue to spiral upward. Small businesses, in particular, are reporting that their premiums are increasing as much as thirty and forty percent over the previous year. Increases of this magnitude appear to be out of line with national trends in health care spending. Clearly, an explanation from providers and insurers of the factors causing dramatic increases in premiums is required!

In particular, the impact of premiums on small businesses is especially unsettling. The Commonwealth's economic recovery is closely tied to the ability of small businesses to grow and survive. With unemployment continuing to be a serious problem, despite other hopeful economic indicators, businesses are unlikely to increase their workforce if the added cost of health care benefits continues to overwhelm their bottom line. Even larger businesses are challenged to maintain the historic level of insurance benefits for their employees.

Additionally, state and local government budgets and those of human service providers are closely tied to employee benefit costs. Dramatic increases in health insurance costs make it more difficult of municipalities and non-profit service providers to retain or hire the employees needed to deliver essential services. Increases in the employee share of health costs in a time when wages are being frozen or cut, are a growing burden for workers in both public and private sectors.

Related to concerns about higher premiums is the trend toward higher co-pays and deductibles. With so few individuals holding health savings accounts, the crunch of credit card debt and lack of credit availability, these higher out of pocket health costs are likely to lead to health care related bankruptcy and, especially, to inability to access needed care. We all know that failure to have access to needed care early in the development of illness is likely to result in higher health costs as the illness progresses.

A report released last week by Centers for Medicare and Medicaid Services revealed that health care spending rose 4.4% in 2008 - the smallest increase in fifty years - since the spending was first tracked in 1960. How can higher premiums for health insurance and increase co-pays and deductibles can be justified in light of this report?

There is widespread concern with dramatic increases in health insurance premiums that have been announced recently.

Small businesses, in particular, are reporting that their premiums are increasing as much as thirty and forty percent over the previous year. Increases of this magnitude appear to be out of line with national trends in health care spending. Clearly, an explanation of the dramatic increases in premiums is required!

Deeply troubling is the apparent reluctance by Massachusetts health care providers and health insurance plans to fully participate in public hearings regarding the rising costs of health care for small business. The Boston Globe reported recently (1/8/2010) that "leaders of some of the state's largest hospitals failed to show up at a public hearing to answer regulator's questions about what is driving up costs. A month earlier, officials of the state's major insurance companies testified at an earlier set of hearings, but refused to answer key questions."

It is unacceptable for providers or insurers - which are mostly tax-exempt non-profits - to demonstrate such utter lack of cooperation or respect. If there is a credible explanation, it would be a welcome piece of needed information to help policy makers and the public understand this lack of candor.

The Commonwealth has, historically, granted tax-exemption to hospitals and to the major health insurers through their non-profit status. Hospitals, in particular, also enjoy the benefits of legislation that limits tort liability. These exemptions were provided because of the essential public service that such institutions provide. Furthermore, health care professionals are granted license to practice their professions by the Commonwealth. However, the apparent lack of cooperation in exploring the fundamental obstacles to health care cost containment challenges the wisdom of such public policies. When public benefits are bestowed, public obligations are expected and must be honored!

The public deserves answers to some very serious questions. Specifically, why should the Commonwealth continue to allow these very valuable protections to remain in the face of such striking lack of cooperation and respect? Why should state officials oppose calls for rate setting of both provider charges and insurance rates when there is an unwillingness to work cooperatively for a solution to spiraling health care charges and insurance premiums? Why do the people of Massachusetts pay some of the highest health care costs in the Nation, and perhaps the world, when we cannot demonstrate that the care provided is of the highest quality or that the insurance coverage is primarily used to pay for care rather than administrative or other costs? How can the trustees of our non-profit health care providers and insurers justify the lavish levels of compensation and benefits so often paid to top executives and consultants?

The Legislature is looking forward to health care cost transparency hearings required by sections 23 and 24 of Chapter 305 of the Acts of 2008. The hearing are expected to focus on the impact of rising costs on all of us, not just small businesses. These hearing should have been conducted last year by the Patrick Administration and the Attorney General in time for the submission of the first of what will be annual reports to the House and Senate Committees on Ways and Means and the Joint Committee on Health Care Financing by December 31, 2009.

The purpose of this legislatively-mandated effort is to provide critical information concerning spending trends and underlying factors, along with any recommendations for strategies to increase the efficiency of the health care system. This information is vital to successfully implementing health care payment reform as recommended by a special commission last July.