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December 7, 2023

Emerson hospital head says healthcare costs are at tipping point

An ambulance Photo | Courtesy of UMass Memorial Medical Center UMass Memorial Health ambulance

The head of Emerson Hospital thinks health care challenges are at the "proverbial tipping point." A veteran small business group leader thinks there's "something wrong" with the costs his members face.  And insurers argue that they "cannot fix the affordability challenge alone."

More than a decade after Massachusetts enacted a landmark law designed to contain health care cost growth, the trend continues to head in the wrong direction, spawning warnings from regulators and industry leaders.

A discussion Wednesday among members of the Health Policy Commission's Advisory Council revealed a central tension that policymakers will need to navigate: almost everyone agrees that changes need to be made to relieve high prices, but stakeholders have different conclusions on where the biggest problems lie.

The commission's latest annual report about health care cost trends highlighted a range of worrying data points about rising pressure on patients and employers, and it outlined nine major policy recommendations to wrangle the issue.

One of the HPC's recommendations is to boost oversight of spending by pharmaceutical companies, who are not subjected to the same degree of state regulatory oversight as insurers and health care providers.

Krina Patel, the head of U.S. state and local government affairs for pharmaceutical giant Biogen, told fellow HPC Advisory Council members that any oversight reforms on the industry need to "help consumers."

"I have the benefit of leading a team that covers the 50 states, and we know that a lot of states have passed these prescription drug affordability boards, these big, costly bureaucratic structures, but there's no evidence that that's actually going to lower costs for consumers," Patel said. "So any kind of reform we do [has] to be meaningful to customers [and] consumers at the end of the day. Same with transparency information -- we are willing to provide transparency with confidentiality protections, but at the end of the day, that information should be something that can be used by consumers to make meaningful decisions."

Patel also recommended action to more strongly regulate industry middlemen known as pharmacy benefit managers and to share savings with patients from rebates that pharmaceutical companies pay to insurers and PBMs.

"I have a very opposite view from my colleague here at Biogen about some of the things she described," replied Lora Pellegrini, president of the Massachusetts Association of Health Plans, dubbing a "copay accumulator" tactic that Patel mentioned "anti-consumer."

"When you limit copays, you are actually doing exactly what the drug companies would want, which is having the consumer think at the time of purchase the drugs are really cheap," Pellegrini added. "We know they're anything but cheap, and those costs are just going to now be built into [insurance] premiums."

Between 2019 and 2021, total health care expenditures per capita in Massachusetts increased at an annualized rate of 3.2 percent, just above the 3.1 percent benchmark that state officials set as their goal to contain costs.

HPC researchers have warned of major impacts on Bay Staters from rising health care spending. The average annual family premium jumped by more than a third from 2012 to 2021, rising to $23,100, with cost growth regularly outpacing wage growth, officials said.

"You also have to look at different types of consumers -- what is happening, small purchasers and small businesses versus large purchasers, self-insured versus fully insured?" said Jon Hurst, president of the Retailers Association of Massachusetts. "We would argue that small businesses are way, way above that benchmark, about three times higher than the benchmark each and every year, and something's wrong there."

Exacerbated by the COVID-19 pandemic, many providers continue to struggle with staffing shortages that have made care more difficult to obtain for many patients.

Christine Schuster, president and CEO of Emerson Hospital, told fellow council members about how she recently lost a mammography technician who accepted a job at an academic medical center with virtually the same job duties but better pay.

Community hospitals, she said, cannot continue to provide service to local populations at lower costs if their staff leave for larger hospitals that pay more and get reimbursed more.

"Between the providers and the insurers together, there's no lack of challenges for us in this state, and I do really feel like we're at a pivotal moment where people really want to work together," Schuster said. "The insurers can't fix the health challenges, nor can the providers, so something has got to break. We really are at that proverbial tipping point."

The HPC presented reforms the regulatory agency wants to better control health care cost growth. Some of its ideas require legislative action, such as giving the HPC more teeth to hold health care entities accountable for their role in disproportionately driving up spending.

Lawmakers agreed last year on a constellation of reforms designed to boost access to mental health care, but they have been unable to get on the same page when it comes to a comprehensive response to overall cost growth.

The Senate last month approved a prescription drug pricing measure for the third straight lawmaking session, this time around newly featuring a provision that would cap out-of-pocket costs for some widely used medications. The House never took up either of the two previous versions, and Democrats there have given no serious indications about jumping on board this session.

Meanwhile, House Speaker Ron Mariano continues to push for greater oversight of large hospital expansions into territories covered by smaller, community hospitals, which some experts say can drive up costs. The Senate has not signaled any plans to address that issue.

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