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Growth in state health care spending drops to lowest level in five years

Out-of-pocket costs, such as deductibles and co-pays, increased at a rate of 5.7 percent last year in Massachusetts.FILE PHOTO/GETTY IMAGES

The state made headway in controlling health care spending last year, according to a report released Wednesday.

Total health spending in Massachusetts increased 1.6 percent in 2017 — the lowest level of growth in five years — even as costs remain a burden for many consumers.

Spending on health care totaled $61.1 billion, or $8,907 per person, according to the report from the Center for Health Information and Analysis, a state agency. That was within a state-mandated target for controlling costs.

The figures — which include spending by Medicare, Medicaid, and private insurers — are a bright spot for a state with notably high health care costs. But they are preliminary and are likely to be revised in the future as more data become available.


The report also found that consumers are not necessarily benefiting from moderating health costs. Out-of-pocket costs, such as deductibles and copays, increased at a rate of 5.7 percent last year. Insurance premiums for businesses and their employees are also growing faster than total health spending.

Stuart Altman, chairman of the state Health Policy Commission, which monitors health costs, said the report shows Massachusetts is leading the country in lowering the rate of growth in medical spending.

“Underneath the headline number, however, are some areas that require further examination,” Altman added in a statement. “While total health care spending growth is very low, there are concerning trends related to the affordability of care and coverage.”

A 2012 state law requires Massachusetts to contain the growth in medical spending to 3.6 percent a year. That target soon will be lowered, to 3.1 percent.

The new analysis shows that spending in the state Medicaid program, called MassHealth, dipped 0.2 percent as enrollment fell last year. That was an anomaly for a public program that is often seen as a budget buster. The taxpayer-funded program provides coverage for low-income residents.


Officials in Governor Charlie Baker’s administration said they found savings by taking steps to ensure that only people eligible for MassHealth receive benefits. They said they also have been tightening controls over some services, such as home health care.

The administration “is pleased to have saved taxpayers hundreds of millions of dollars by strengthening the program’s internal controls and improving caseload management, while still ensuring nearly universal health coverage for the people of Massachusetts,” Baker spokesman Brendan Moss said in a statement.

In the commercial health insurance market, which includes people who are covered through their employers, spending increased at a more brisk 3.1 percent.

Lora Pellegrini, president of the Massachusetts Association of Health Plans, which represents insurance companies, said the report shows the state has made “significant strides” on spending.

“This is good news for employers and consumers, but today’s report also demonstrates that more work needs to be done to address health care cost drivers in our marketplace,” she said in a statement.

The report included a revision to the estimate for health spending growth in 2016. That figure was revised upward, from 2.8 percent to 3 percent.

Ray Campbell, executive director of CHIA, the agency that produced the report, said he expects the 2017 estimate won’t be revised significantly because the agency’s calculations have become more precise over time.

“Our sense is that it’s getting more and more accurate,” he said Wednesday.

Prescription drugs once gain were a major contributor to spending, growing by 5 percent last year.


“We need to take much more aggressive action to control the growth of drug prices,” Brian Rosman, director of policy and government relations at the consumer advocacy group Health Care for All, said in a statement. “We see this as a top priority for the next governor and Legislature next year.”

But Robert K. Coughlin, president of the Massachusetts Biotechnology Council, noted that the rate of increase in drug spending last year slowed from 6.4 percent in 2016, and 12.1 percent in 2015.

“The biopharma industry in Massachusetts continues to bring value to the overall health care system and to patients, and is constantly looking for new ways to lower drug costs and improve patient access,” he said in a statement.

Steve Walsh, president of the Massachusetts Health & Hospital Association, said the state’s progress in controlling health costs would be undone if Question 1 on the statewide ballot is approved by voters this November.

The Massachusetts Nurses Association, a labor union, is promoting the ballot question, which would set strict limits on the number of patients assigned to hospital nurses.

“All of the improvements highlighted in the CHIA report are directly threatened by Question 1 on this November’s ballot, which proposes mandated one-size-fits-all registered nurse staffing ratios,” Walsh said in a statement.

The union argues that patient limits are necessary to improve patient care.

Priyanka Dayal McCluskey can be reached at Follow her on Twitter @priyanka_dayal.