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Massachusetts contains health care costs, but consumers keep paying more

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Massachusetts met its self-imposed goal of controlling the growth in health spending last year, according to a new state report — but the cost burden on consumers continued to rise at a worrying pace.

Statewide health care spending grew to an estimated $60.9 billion in 2018, or $8,827 per person, according to the study from the state Center for Health Information and Analysis. That’s a 3.1 percent increase from the previous year and in line with the state benchmark for controlling spending.

But costs for patients and consumers rose more quickly. For individuals with private insurance, out-of-pocket costs increased 6.1 percent and premiums rose 5.2 percent over the past two years, outpacing wages and inflation.


In addition, more Massachusetts residents signed up for high-deductible health plans, meaning they had to pay more than $1,000 out of pocket — on top of premiums — before their insurance kicked in.

About 1.2 million people in Massachusetts were enrolled in high-deductible plans in 2018, an 8.5 percent jump from the previous year.

David Seltz, executive director of the state Health Policy Commission, another agency that tracks health spending, said the cost trend for consumers is a “warning sign” about the affordability of health care.

“What we should be working toward is if we can hold down total health care spending, that should actually translate to savings for families, for employers,” Seltz said. “We haven’t made as much progress as we’d like to.”

The report had some bright spots. It showed that for each of the past three years, the state met its target for controlling health care costs.

That target, established through a 2012 state law, initially sought to contain the growth in health spending to 3.6 percent per year. Last year, the benchmark became a stricter 3.1 percent.

Prescription drugs and hospitals were the biggest drivers of total spending in 2018.


“While it is good news that the state met the cost growth benchmark, this report points out that this is not necessarily what consumers are experiencing,” said Alex Sheff, co-director of policy and government relations at the Boston-based consumer group Health Care For All.

“When out-of-pocket costs go up, [patients] tend to use less of everything — including services and medications that would help the most,” Sheff said.

Insurers charge copays and deductibles as a strategy for managing costs.

It’s about “having consumers participate in their health care by thinking about the care they’re using,” said Lora M. Pellegrini, president of the Massachusetts Association of Health Plans, an insurance group.

Steve Walsh, president of the Massachusetts Health & Hospital Association, said the report shows the state is moving in the right direction, despite ongoing challenges to cost control.

Hospitals and insurers both said they were concerned by drug costs, which increased 5.8 percent last year, before accounting for discounts.

Drug costs have been a focus of legislation nationally and at the state level. This summer, Massachusetts lawmakers approved a policy that gives the Baker administration more power to negotiate drug prices in the state Medicaid program.

But Robert K. Coughlin, president of the Massachusetts Biotechnology Council, which represents drug firms, said the focus on drug prices is misplaced because drug makers give insurers big discounts to help make their products more affordable.

Coughlin urged policymakers to look at other drivers of health care costs.


The state report calculates spending in all parts of the health care system, including the private insurance market, Medicare, and the state Medicaid program, known as MassHealth.

The spending estimates for 2018 are preliminary and are likely to be revised. For 2017, officials initially said spending increased 1.6 percent, but they later adjusted that figure to 2.8 percent after receiving updated figures from health insurers.

Ray Campbell, executive director of the Center for Health Information and Analysis, acknowledged that the revisions are frustrating. But he noted that Massachusetts is the only state the attempts this kind of analysis.

“We’re the one state that knits this all together,” he said. “At least we’re having a debate based on a factual foundation.”

McCluskey can be reached at