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Health care costs forecast to rise 7 percent

Health care costs are projected to increase by about 7 percent this year, making it likely that employers will try to control expenses by changing benefits, increasing deductibles, and otherwise shifting more costs to their workers, the state’s health insurance companies said Thursday.

The increase, about double the target for growth in medical spending under the state’s universal health care law, is driven in part by expensive hospital visits, complex procedures, and the astronomical cost of specialty drugs, including one for hepatitis C, the insurers told a group of employee benefits specialists.

“It’s a budget-buster,” said Dolores Hamilton, a human resources director for the Town of Framingham, of health insurance costs.


Executives from insurers such as Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Care, and Tufts Health Plan presented their outlooks to the annual conference of the New England Employee Benefits Council. They told about 100 benefits specialists that medical cost increases are more moderate in Massachusetts than in other states, but still well above the state’s goal of holding the growth in health care spending to 3.6 percent, a benchmark established in 2012.

In 2013, the state was able to stay below the cap, with overall health care spending growing by 2.3 percent, according to a report last year from the Center for Health Information and Analysis, a state agency.

Insurers warned that health care costs could accelerate as the economy improves and consumers go to doctors more frequently or decide to get procedures they may have delayed because they were worried about money during the recession and its aftermath.

In addition to increasing deductibles and out-of-pocket expenses, many employers are responding to rising costs by capping their contributions to insurance premiums and asking employees who want more expensive plans to pay the additional cost, said Patty Houpt, executive director of the New England Employee Benefits Council. Some are narrowing treatment options to community hospitals rather than more expensive academic medical centers.


Large and small insurance companies said they are taking several steps to try to hold down costs. They’re negotiating contracts that reward quality of outcome over quantity of services, using data to try to prevent high-cost procedures, and providing consumers with mobile applications that can help them compare hospitals and seek the best prices.

Insurers are also trying to curb double-digit increases in the costs of prescription drugs. Blue Cross Blue Shield, for example, reviews all custom prescriptions, which are usually more expensive, for necessity and for price appropriateness, said Dennis Charland, a vice president for the state’s biggest insurer.

Harvard Pilgrim Health Care last month became the first health insurer in the region to negotiate a discount for a hepatitis C drug regime that has very high cure rates but can cost more than $90,000. Harvard Pilgrim’s one-year contract with the maker of the drug is expected to save the insurance company $10 million in reimbursements to doctors who treat hepatitis C patients.

Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.