As we consider what to do about health care costs and coverage, there are a couple data points worthy of our attention.
First, Medicare and Medicaid trends – which are looking better these days. As Maggie Mahar noted, “From 2000 through 2009, Medicare’s outlays climbed by an average of 9.7 percent a year. By contrast, since the beginning of 2010, Medicare spending has been rising by less than 4 percent a year.”
And this trend looks like it will continue; according to research published by the Urban Institute, both the Centers for Medicare and Medicaid Services (CMS) and the Congressional Budget Office (CBO) “annual growth in spending per enrollee in both programs over this decade (2011-2020) is projected to be less than the growth in private insurance spending and close to the growth in per capita GDP.”
Note this is per-capita growth, which is more accurate when comparing different payer types as it accounts for enrollment changes.
Another data point – Massachusetts. As we noted a few weeks back, commercial insurance rate increases have dropped dramatically over the last year, driven by payers and providers working together to better manage cost and quality. Small group insurance premiums were up just over one percent last quarter, the second quarter in a row where rates have gone up less than 2 percent. Moreover, two large health plans filed for rate decreases…
Why? What’s made this happen?
Glad you asked. According to Kaiser Health News/NP5,
“…two years ago, the governor [Patrick Deval] directed his insurance commissioner to exercise a little-used power to turn down a requested rate increase because it was excessive. Not every state has this power.
Insurance companies were outraged. But [CEO Andrew} Dreyfus of Blue Cross Blue Shield now says it was a pivotal point.
“It sent a message to the entire health care community and the business community that we had to change,” Dreyfus says.
And change seems to be happening. Insurers have torn up their contracts with hospitals calling for annual reimbursement increases of 8 percent and 10 percent, and negotiated agreements providing for 3 percent, 2 percent and even zero percent increases.”
Meanwhile, employers’ health care costs are up 5.9% this year, and would have increased more if not for a significant increase in cost-shifting to employees (up over 19% from 2011 – 2012); employees are now paying over a third of their health care costs.
What does this mean for you?
If private insurers can’t do a better job controlling costs, it will be increasingly hard to argue against government intervention, whether in the form of top-down Massachusetts-style price control or delivery of care via governmental programs.
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